StubHub Holdings Inc.
03/05/2026 | Press release | Distributed by Public on 03/05/2026 05:01
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report. The following discussion contains forward-looking statements that are based on current plans, expectations and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, those identified below and those discussed in the section titled "Risk Factors" and other sections, including the "Special Note Regarding Forward-Looking Statements" of this Annual Report. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.
The following discusses financial condition and results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. Discussion of financial condition and results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Prospectus filed with the SEC on September 17, 2025.
Overview
We are a leading global ticketing marketplace for live events. StubHub services customers in over 200 countries and territories, supporting over 30 languages and accepting payments in over 45 currencies - from sports to music, comedy to dance, festivals to theater. StubHub offers a safe and convenient way to buy or sell tickets to live events across the world for memorable live experiences.
Initial Public Offering
Our IPO was completed on September 18, 2025. Our consolidated financial statements as of and for the year ended December 31, 2025 reflect the sale by us of an aggregate of 34,042,553 shares of Class A common stock in our IPO, at the public offering price of $23.50 per share, for net proceeds to us of approximately $758.0 million after deducting underwriting discounts and commissions of $42.0 million.
Upon our IPO, we recognized $1,400.7 million of stock-based compensation expense, net of $27.1 million capitalized for internally developed software, associated with RSUs, stock options and restricted stock for which the service-based and performance-based vesting conditions, as applicable, were fully or partially satisfied in connection with the IPO.
Highlights for 2025
Key Business Metrics
•Gross Merchandise Sales ("GMS") was $9.2 billion for the year ended December 31, 2025, an increase of 6% year-over-year
Financial Results
•Revenue was $1.7 billion for the year ended December 31, 2025, a decrease of 1% year-over-year
•Gross margin was 82% for the year ended December 31, 2025, as compared to 81% in the year ended December 31, 2024
•Total costs and expenses were $3.1 billion for the year ended December 31, 2025, as compared to $1.6 billion in the year ended December 31, 2024
•Net loss was $1.9 billion for the year ended December 31, 2025, as compared to $2.8 million in the year ended December 31, 2024
•Adjusted EBITDA was $232.4 million for the year ended December 31, 2025, as compared to $298.7 million in the year ended December 31, 2024
•Net cash provided by operating activities was $192.6 million for the year ended December 31, 2025, as compared to $261.5 million in the year ended December 31, 2024
•Free Cash Flow was $158.2 million for the year ended December 31, 2025, as compared to $255.1 million in the year ended December 31, 2024
•Cash and cash equivalents were $1.2 billion as of December 31, 2025
Key Factors Affecting Our Performance
We believe that the growth and future success of our business depends on many factors. While each of these factors presents significant opportunities for our business, they also pose important challenges that we must continue to successfully address in order to sustain our growth and improve our results of operations.
Attract Buyers Efficiently
In order to drive transaction activity on our marketplace, we must attract buyers efficiently. Our ability to do this relies on leveraging the strength of our leading global brands and performance marketing expertise. By combining unpaid traffic with high-return-on-investment marketing spend, we have a multi-faceted customer acquisition strategy that is designed to drive high-intent users to our marketplace and deliver superior buyer acquisition efficiency. We believe that the combined strength of our StubHub and viagogo brands, as well as our performance marketing expertise will continue to enable us to attract buyers to the marketplace efficiently through these channels. We believe this drives efficiency and growth over the long term.
Attract More Sellers
In order to deliver a compelling value proposition to buyers, we need a large and diverse inventory of live event tickets on our marketplace. Our ability to offer sufficient inventory requires us to maintain a large base of sellers and help them efficiently sell tickets so that they continue to utilize our marketplace. StubHub's large base of individual sellers offers a unique breadth and depth of inventory that we believe sets us apart in the live event ticketing ecosystem. In addition to individual sellers, professional sellers and content rights holders also provide inventory on our marketplace. If we fail to attract new sellers, retain existing sellers or fail to provide a wide enough selection of tickets on our marketplace, the value proposition to buyers may be diminished.
Monetize Transactions Across Our Platform
In order to grow our business, we must continue to monetize the ticketing transactions that we facilitate on our platform by charging fees to buyers and sellers for the services we provide. Our service fees per transaction are generally set as a percentage of the total transaction value. While the fees we charge can vary by transaction, we have maintained a consistent ratio of average service fees per transaction to GMS (as defined below) of approximately 20% annually over our history. Our ability to maintain attractive transaction economics reflects our value proposition to buyers and sellers.
Continued Production and Popularity of Live Events
Our ability to generate revenue and achieve growth is dependent on sports leagues, teams, venues, performing artists and other content rights holders offering live events as well as the number and popularity of these events in a given period. Consequently, large-scale events and tours can drive excess growth in certain periods, and if large-scale events or tours are canceled, reduced, do not repeat or do not achieve the same level of popularity, it could cause fluctuations in our year-over-year growth rates and adversely impact our financial performance in affected periods.
Investments in Our Technology, Products and Services
We plan to make focused investments in technology, products and services to support buyers and sellers on our marketplace, both to increase our market share in secondary ticketing and accelerate our traction in newer initiatives, including our entry into the original issuance ticketing market and digital advertising. We plan to continue to make targeted investments in products and services for buyers to enhance live event discovery, personalization and seamless purchase functionality. We will also continue to invest in our marketplace for our sellers. While our seller products today are primarily focused on inventory management and pricing intelligence for the secondary market, we plan to add additional features to our seller products and tools to continue reducing friction for sellers, including content rights holders with larger ticket portfolios, to list and sell their tickets on our marketplace. Our results of operations may fluctuate as we make these investments to attract buyers and sellers and drive additional growth.
Components of Results of Operations
Revenue
We generate substantially all of our revenue from fees we charge buyers and sellers for the services we provide to facilitate their transactions to buy and sell live event tickets on our marketplace. Our fees are generally set as a percentage of the GMS value of a transaction conducted on our platform. We recognize revenue for transaction facilitation net of the price of tickets sold.
We also charge shipping fees to buyers of tickets and we recognize revenue for shipping fees on a gross basis.
In addition, in limited circumstances, we recognize proceeds associated with the sale of tickets as revenue, on a gross basis, in addition to any transaction fees.
Revenue earned from transactions that occur during a financial reporting period is recorded net of incentives, refunds for actual canceled events not previously reserved as well as an estimate for future canceled events.
Costs and Expenses
Cost of Revenue (Exclusive of Depreciation and Amortization)
Cost of revenue (exclusive of depreciation and amortization) includes payment processing costs, inventory costs, ticket substitution and replacement costs, shipping costs, costs associated with the maintenance and support of our platform. Payment processing costs consist of merchant fees, expenses associated with the usage of cloud infrastructure and chargebacks. Inventory costs represent the total amount of minimum proceeds that we agreed to remit to content rights holders in exchange for their agreement to list a certain number of original issuance tickets, as well as any additional payments due to such content rights holders based on the final sale price of the tickets. Costs associated with the maintenance and support of our platform include employee-related expenses, hosting and bandwidth and allocated overhead costs.
We expect our cost of revenue to continue to increase in absolute dollars as we continue to invest in our business to support revenue growth. We incurred additional cost of revenue expense during the period in which we completed the IPO as a result of the stock-based compensation expense associated with our RSUs. We also expect to continue incurring stock-based compensation expense going forward as a public company.
Operations and Support
Operations and support expense is not directly related to revenue activities and primarily consists of compensation expenses for employees and outside contractors who provide buyer and seller support and allocated overhead costs. We expect our operations and support expense to continue to increase in absolute dollars as we continue to support revenue growth. We incurred additional operations and support expense during the period in which we completed the IPO as a result of the stock-based compensation expense associated with our RSUs. We also expect to continue incurring stock-based compensation expense going forward as a public company.
Sales and Marketing
Sales and marketing expense primarily consists of fixed and variable marketing and advertising expenses, including sponsorship fees paid to certain content rights holders, and personnel-related costs for sales and marketing employees, including allocated overhead costs. We expect sales and marketing expense to continue to increase in absolute dollars as we accelerate our marketing strategies to grow revenue. We incurred additional sales and marketing expense during the period in which we completed the IPO as a result of the stock-based compensation expense associated with our RSUs. We also expect to continue incurring stock-based compensation expense going forward as a public company.
General and Administrative
General and administrative expense includes personnel-related costs for functions such as product development, finance and accounting, legal and human resources as well as indirect tax contingency expenses, legal expenses, information technology costs, allocated overhead costs, professional services expenses and restructuring costs. We expect our general and administrative expense to increase in absolute dollars as we continue to grow our business. We expect to incur additional general and administrative expense as a result of investment in growth initiatives and operating as a public company, including expenses to comply with the rules and regulations of the SEC and listing rules of NYSE, as well as higher expenses for directors and officers insurance, investor relations and professional services. We incurred additional general and administrative expense during the period in which we completed the IPO as a result of the stock-based compensation expense associated with our RSUs, stock options, warrants and restricted stock. We also expect to continue incurring stock-based compensation expense going forward as a public company.
Depreciation and Amortization
Depreciation and amortization expense primarily consists of depreciation and amortization expenses associated with our intangible assets, property and equipment and capitalized software development costs. Depreciation includes expenses associated with computer equipment and software, leasehold improvements and office furniture and equipment. Amortization includes expenses associated with our acquired intangible assets and capitalized software development costs. Depreciation and amortization are excluded from cost of revenue and operating expense line items. We also expect to continue incurring higher amortization expense related to the capitalized software development costs given the costs that were capitalized upon and subsequent to the IPO.
Other (Expense) Income
Interest Income
Interest income consists of interest earned on bank deposits, money market funds, and cash held at online payment companies, which are primarily comprised of short-term, highly liquid investments with original maturities of three months or less when purchased.
Interest Expense
Interest expense consists of interest incurred on borrowings and debt issuance costs that are amortized using the effective interest method, over the term of the debt. Interest rate swaps designated and accounted for as cash flow hedges are presented within interest expense.
Foreign Currency (Losses) Gains
Foreign currency (losses) gains represent the remeasurement of monetary assets to be received or liabilities to be paid for the settlement of a transaction denominated in a currency other than the functional currency.
(Losses) Gains on Derivatives
We use interest rate swaps to manage interest rate risk on future cash flows. Interest rate swaps not designated as a cash flow hedge are presented in (losses) gains on derivatives.
For derivative instruments that are not designated as hedging instruments, any change in fair value during the reporting period is recognized in our consolidated statements of operations. For derivative instruments that are designated as cash flow hedges,any change in fair value during the period is reported as a component of accumulated other comprehensive loss on our consolidated balance sheets and subsequently reclassified into our consolidated statements of operations in the same period the forecasted hedged interest payments affects earnings.
(Provision) Benefit for Income Taxes
We are subject to income taxes in the U.S. and foreign jurisdictions in which we do business. Foreign jurisdictions have different statutory tax rates than those in the U.S. Additionally, certain of our foreign earnings may also be taxable in the U.S. Accordingly, our effective tax rate is subject to significant variation due to several factors, including variability in our pre-tax and taxable income or loss and the mix of jurisdictions to which they relate, intercompany transactions, changes in how we do business, acquisitions, investments, tax audit developments, the valuation of our net deferred tax assets, and foreign currency gains and losses. Our effective tax rate can also be sensitive to changes in statutes, regulations, case law and administrative practices, principles and interpretations related to tax, including changes to the global tax framework, and other laws and accounting rules in various jurisdictions. We continue to reassess the valuation allowance and uncertain tax positions quarterly, and if future evidence or events change this assessment, a tax benefit or provision will be recorded accordingly.
Results of Operations
The following tables set forth our results of operations for the periods presented:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Revenue | $ | 1,745,188 | $ | 1,770,645 | $ | 1,367,719 | |||||||||||
| Costs and expenses: | |||||||||||||||||
|
Cost of revenue (exclusive of depreciation and amortization shown separately below) (1)
|
313,984 | 334,102 | 231,870 | ||||||||||||||
|
Operations and support (1)
|
63,229 | 59,451 | 66,611 | ||||||||||||||
|
Sales and marketing (1)
|
971,717 | 827,972 | 517,795 | ||||||||||||||
|
General and administrative (1)
|
1,714,628 | 386,531 | 275,456 | ||||||||||||||
| Depreciation and amortization | 25,604 | 24,532 | 22,753 | ||||||||||||||
|
Total costs and expenses
|
3,089,162 | 1,632,588 | 1,114,485 | ||||||||||||||
|
(Loss) income from operations
|
(1,343,974) | 138,057 | 253,234 | ||||||||||||||
| Interest income | 42,412 | 41,118 | 22,514 | ||||||||||||||
| Interest expense | (140,035) | (179,778) | (155,942) | ||||||||||||||
| Other income (expense), net | 4,552 | 1,907 | (1,784) | ||||||||||||||
| Foreign currency (losses) gains | (89,664) | 41,070 | (24,730) | ||||||||||||||
| Loss on extinguishment of debt | (18,492) | (8,216) | - | ||||||||||||||
| (Losses) gains on derivatives | (139) | 3,101 | (7,696) | ||||||||||||||
| Total other expense, net | (201,366) | (100,798) | (167,638) | ||||||||||||||
| (Loss) income before income taxes | (1,545,340) | 37,259 | 85,596 | ||||||||||||||
| (Provision) benefit for income taxes | (360,594) | (40,059) | 319,605 | ||||||||||||||
| Net (loss) income | $ | (1,905,934) | $ | (2,800) | $ | 405,201 | |||||||||||
(1) Includes stock-based compensation as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
|
(in thousands)
|
|||||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization shown separately below) | $ | 23,808 | $ | - | $ | - | |||||||||||
| Operations and support | 6,033 | - | - | ||||||||||||||
| Sales and marketing | 28,840 | - | - | ||||||||||||||
| General and administrative | 1,388,987 | 7,737 | 34,897 | ||||||||||||||
|
Total stock-based compensation expense
|
$ | 1,447,668 | $ | 7,737 | $ | 34,897 | |||||||||||
Upon the Company's IPO, we recognized $1,400.7 million of stock-based compensation expense, net of $27.1 million capitalized for internally developed software, associated with RSUs, stock options and restricted stock for which the service-based and performance-based vesting conditions, as applicable, were fully or partially satisfied in connection with the IPO.
Comparison of the Years Ended December 31, 2025 and 2024
Revenue
| Year Ended December 31, |
$ Change
|
% Change
|
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
| Revenue | $ | 1,745,188 | $ | 1,770,645 | $ | (25,457) | (1.4)% | ||||||||||||||||
The overall decrease in our revenue in the amount of $25.5 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024 is primarily attributable to a decrease of $75.0 million due to a lower average transaction fee rate we charge to buyers and sellers on each transaction and a decrease of $69.0 million in sales of tickets for which we assumed inventory risk. This is partially offset by growth in GMS, which was primarily due to an increase in transaction volume on our platform and a decrease of $4.1 million in refunded transaction fees as compared to 2024, primarily driven by fewer cancellations by top-tier artists.
Cost of Revenue (Exclusive of Depreciation and Amortization)
| Year Ended December 31, |
$ Change
|
% Change
|
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
|
Cost of revenue (exclusive of depreciation and amortization)
|
$ | 313,984 | $ | 334,102 | $ | (20,118) | (6.0)% | ||||||||||||||||
The overall decrease in our cost of revenue (exclusive of depreciation and amortization) in the amount of $20.1 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024 is primarily attributable to a decrease of $47.8 million in inventory costs and a reduction of $35.7 million in ticket substitution and replacement costs. This is partially offset by an increase of $40.0 million in payment processing costs related to the increase in the volume of transactions we facilitated during the year ended December 31, 2025 and an increase of $23.8 million related to stock-based compensation expense recognized as a result of our IPO.
Operations and Support
| Year Ended December 31, |
$ Change
|
% Change
|
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
|
Operations and support
|
$ | 63,229 | $ | 59,451 | $ | 3,778 | 6.4% | ||||||||||||||||
The overall increase in operations and support expenses in the amount of $3.8 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024 is primarily attributable to an increase of $6.0 million related to stock-based compensation expense recognized as a result of our IPO and an increase in outsourced customer support. This is partially offset by a decrease in employee headcount.
Sales and Marketing
| Year Ended December 31, |
$ Change
|
% Change
|
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
|
Sales and marketing
|
$ | 971,717 | $ | 827,972 | $ | 143,745 | 17.4% | ||||||||||||||||
The overall increase in sales and marketing expenses in the amount of $143.7 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024 is primarily attributable to an increase of $105.1 million in advertising expenses driven by an increase in transaction volume, increased customer acquisition costs to drive relative market share gains, investment in new initiatives, and an increase of $28.8 million related to stock-based compensation expense recognized as a result of our IPO.
General and Administrative
| Year Ended December 31, |
$ Change
|
% Change
|
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
|
General and administrative
|
$ | 1,714,628 | $ | 386,531 | $ | 1,328,097 | 343.6% | ||||||||||||||||
The overall increase in general and administrative expense in the amount of $1,328.1 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024 is primarily attributable to an increase of $1,381.3 million related to stock-based compensation expense recognized as a result of our IPO. This is partially offset by a decrease of $25.7 million of one-time expenses in connection with our loan extension in 2024 and a decrease of $18.8 million in professional services fees.
Depreciation and Amortization
| Year Ended December 31, |
$ Change
|
% Change
|
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
| Depreciation and amortization | $ | 25,604 | $ | 24,532 | $ | 1,072 | 4.4% | ||||||||||||||||
Depreciation and amortization expenses increased $1.1 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily due to increased depreciation and amortization for new assets placed into service.
Interest Income
| Year Ended December 31, |
$ Change
|
% Change
|
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
| Interest income | $ | 42,412 | $ | 41,118 | $ | 1,294 | 3.1% | ||||||||||||||||
Interest income increased $1.3 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily due to higher cash and cash equivalent balances throughout the year, partially offset by lower interest rates.
Interest Expense
| Year Ended December 31, |
$ Change
|
% Change
|
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
| Interest expense | $ | (140,035) | $ | (179,778) | $ | 39,743 | (22.1)% | ||||||||||||||||
Interest expense decreased $39.7 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily due to a decrease of $39.0 million due to lower variable interest rates for our outstanding term loans and repayments of principal of our 2024 USD Term Loan, as well as a one-time reclassification of $24.0 million from accumulated other comprehensive income to interest expense as a reduction of interest expense due to the partial termination of an interest rate swap. This is partially offset by an increase of $20.6 million on settlement from an interest rate swap.
Foreign Currency (Losses) Gains
| Year Ended December 31, |
$ Change
|
% Change
|
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
| Foreign currency (losses) gains | $ | (89,664) | $ | 41,070 | $ | (130,734) | * | ||||||||||||||||
* Not meaningful
Foreign currency losses increased $130.7 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024, which is primarily attributable to the remeasurement of our 2024 Euro Term Loan obligation, indirect tax contingencies and litigation reserves primarily driven by changes in exchange rates.
Loss on Extinguishment of Debt
| Year Ended December 31, |
$ Change
|
% Change
|
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
| Loss on extinguishment of debt | $ | (18,492) | $ | (8,216) | $ | (10,276) | 125.1% | ||||||||||||||||
Loss on extinguishment of debt increased $10.3 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily due to debt paydowns in 2025. This resulted in the partial write-off of the remaining original issuance discount and unamortized debt issuance costs.
(Losses) Gains on Derivatives
| Year Ended December 31, |
$ Change
|
% Change
|
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
| (Losses) gains on derivatives | $ | (139) | $ | 3,101 | $ | (3,240) | * | ||||||||||||||||
* Not meaningful
Gains on derivatives decreased $3.2 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily as a result of a decrease in the settlement received of an interest rate swap derivative, which is not designated as a cash flow hedge.
Provision for Income Taxes
| Year Ended December 31, |
$ Change
|
% Change
|
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
|
Provision for income taxes
|
$ | (360,594) | $ | (40,059) | $ | (320,535) | 800.2% | ||||||||||||||||
Provision for income taxes increased $320.5 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily due to a valuation allowance being recorded on our U.S. deferred tax assets. The tax provision for the twelve months ended December 31, 2024 was primarily attributable to the tax expense incurred in connection with our legal entity restructuring completed in 2024.
Key Business Metric and Non-GAAP Financial Measures
We regularly review the following key business metric and non-GAAP financial measures to evaluate our business, measure our performance, identify trends, prepare financial projections and make business decisions. The measures set forth below should be considered in addition to, not as a substitute for or in isolation from, our financial results prepared in accordance with GAAP. Other companies, including companies in our industry, may calculate these measures differently or not at all, which reduces their usefulness as comparative measures. A reconciliation of the non-GAAP financial measures, Adjusted EBITDA and free cash flow, to the most directly comparable financial measures calculated in accordance with GAAP is set forth below under "-Non-GAAP Financial Measures."
The following table summarizes our key business metric and non-GAAP financial measures (along with the most directly comparable GAAP measures) for the periods indicated:
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|
Year Ended December 31, | |||||||||||||||||||
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|
2025 | 2024 | 2023 | |||||||||||||||||
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|
(in thousands) | |||||||||||||||||||
|
Key Business Metric
|
|
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GMS(1)
|
$ | 9,160,547 | $ | 8,679,626 | $6,857,159 | |||||||||||||||
|
Non-GAAP Financial Measures
|
||||||||||||||||||||
|
Net (loss) income (GAAP)
|
$ | (1,905,934) | $ | (2,800) | $ | 405,201 | ||||||||||||||
|
Adjusted EBITDA(2)
|
$ | 232,436 | $ | 298,675 | $ | 353,919 | ||||||||||||||
|
Net cash provided by operating activities (GAAP)
|
$ | 192,569 | $ | 261,487 | $ | 307,391 | ||||||||||||||
|
Free cash flow(3)
|
$ | 158,189 | $ | 255,110 | $ | 301,954 | ||||||||||||||
(1) See "-Key Business Metric-Gross Merchandise Sales" below for more information.
(2) See "-Non-GAAP Financial Measures-Adjusted EBITDA" below for more information.
(3) See "-Non-GAAP Financial Measures-Free Cash Flow" below for more information.
Key Business Metric
Gross Merchandise Sales
Gross Merchandise Sales ("GMS") represents the total dollar value paid by buyers for ticket transactions and fulfillment. GMS includes fees we charge buyers and sellers that can vary by transaction, as well as the net proceeds we remit to sellers. Our definition of GMS does not include applicable sales, value-added and other indirect taxes, shipping costs and the impact of discounts and coupons as well as event cancellations or expected cancellations after the initial transaction on our platform. We believe it is useful to exclude these items, primarily refunds due to event cancellations, as GMS is a key metric used by management to measure business performance.
Our revenue depends significantly on the dollar value of GMS flowing through our platform and our ability to generate fees from such transactions. We believe that GMS is useful to management and investors as it serves as an important indicator of our ability to attract and satisfy buyers and sellers, the overall health of our marketplace and the scale and growth of our business.
Other marketplaces may not present GMS or may calculate this measure differently, which would reduce its usefulness as comparative measure. GMS is an operating metric and does not represent revenue earned by us calculated in accordance with GAAP.
In 2025, our GMS grew 6% year-over-year due to ongoing market share growth in the North American secondary market and continued growth in international markets and direct issuance. Excluding the impact of Taylor Swift's "Eras" tour in the prior year period, our year-over-year GMS growth was 18%.
Non-GAAP Financial Measures
Adjusted EBITDA
We calculate Adjusted EBITDA as net (loss) income excluding results from non-operating sources including interest income and expense, provision (benefit) for income taxes, other (income) expense, net, foreign currency losses (gains), losses (gains) on derivatives, depreciation and amortization, acquisition-related costs, stock-based compensation expense, debt refinancing costs and loss on extinguishment of debt, indirect tax contingency costs, litigation reserves and other costs and expenses.
Adjusted EBITDA is a key performance measure that our management team uses to assess our operating performance. We present Adjusted EBITDA because management believes it is helpful in highlighting trends in our operating results as it excludes certain items, such as stock-based compensation expense, which are non-cash or whose fluctuations from period-to-period do not necessarily correspond to changes in the operating results of our business. Moreover, it is frequently used by analysts, investors and other interested parties to evaluate companies in our industry.
Adjusted EBITDA has limitations as an analytical measure and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.
In addition, other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net (loss) income and our other GAAP results.
The following table presents a reconciliation of net (loss) income, the most directly comparable financial measure presented in accordance with GAAP, to Adjusted EBITDA.
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Year Ended December 31, | ||||||||||||||||
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2025 | 2024 | 2023 | ||||||||||||||
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(in thousands, except percentages)
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Net (loss) income
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$ | (1,905,934) | $ | (2,800) | $ | 405,201 | |||||||||||
| Add (deduct): | |||||||||||||||||
| Interest income | (42,412) | (41,118) | (22,514) | ||||||||||||||
| Interest expense | 140,035 | 179,778 | 155,942 | ||||||||||||||
| Provision (benefit) for income taxes | 360,594 | 40,059 | (319,605) | ||||||||||||||
| Other (income) expense, net | (4,552) | (1,907) | 1,784 | ||||||||||||||
| Foreign currency losses (gains) | 89,664 | (41,070) | 24,730 | ||||||||||||||
| Losses (gains) on derivatives | 139 | (3,101) | 7,696 | ||||||||||||||
| Depreciation and amortization | 25,604 | 24,532 | 22,753 | ||||||||||||||
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Debt refinancing costs and loss on extinguishment of debt(1)
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18,492 | 33,886 | - | ||||||||||||||
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Acquisition-related costs(2)
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250 | 1,374 | 3,868 | ||||||||||||||
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Stock-based compensation expense(3)
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1,447,668 | 7,737 | 34,897 | ||||||||||||||
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Indirect tax contingency costs(4)
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53,504 | 52,118 | 34,645 | ||||||||||||||
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Litigation reserves(5)
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37,080 | 44,483 | - | ||||||||||||||
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Other costs and expenses(6)
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12,304 | 4,704 | 4,522 | ||||||||||||||
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Adjusted EBITDA
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$ | 232,436 | $ | 298,675 | $ | 353,919 | |||||||||||
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Revenue
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$ | 1,745,188 | $ | 1,770,645 | $ | 1,367,719 | |||||||||||
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Net (loss) income as a percentage of revenue
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(109)% | 0% | 30% | ||||||||||||||
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Adjusted EBITDA as a percentage of revenue
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13% | 17% | 26% | ||||||||||||||
1.During the year ended December 31, 2025, we incurred $18.5 million of loss on extinguishment of debt as a result of our early principal payments related to the 2024 USD Term Loan of $750.0 million and $150.0 million, which are non-recurring
transactions. During the year ended December 31, 2024, we incurred $25.7 million of professional service fees related to our debt refinancing in 2024, which is a non-recurring transaction, and $8.2 million of loss on extinguishment of debt. As such, we do not consider these associated costs to be representative of the ongoing financial performance of our core business.
2.During the years ended December 31, 2025, 2024 and 2023, we incurred $0.3 million, $1.4 million and $3.9 million of transaction and integration costs, respectively, attributable to activities associated with our acquisition of the StubHub business from eBay Inc. (the "StubHub Acquisition"), including for certain personnel-related integration costs for certain StubHub employees we retained following the StubHub Acquisition, significant legal and other consultative fees in connection with the U.K. Competition and Markets Authority's approval proceedings and efforts to integrate acquired information technology infrastructure. We do not consider these costs to be representative of the ongoing financial performance of our core business, and we do not expect these costs to be significant going forward.
3.Upon our IPO, we recognized $1,400.7 million of stock-based compensation expense, net of $27.1 million capitalized for internally developed software, associated with RSUs, stock options and restricted stock for which the service-based and performance-based vesting conditions, as applicable, were fully or partially satisfied in connection with the IPO.
4.During the years ended December 31, 2025, 2024 and 2023, we incurred $51.5 million, $44.1 million and $33.9 million of expenses, respectively, associated with potential indirect tax contingencies for withholding obligations and $2.0 million, $8.0 million and $0.7 million of professional service costs, respectively.
5.During the years ended December 31, 2025 and 2024, we incurred $37.1 million and $44.5 million, respectively, for expenses due to a litigation-related loss contingency for specific matters for which we deemed loss to be probable as described in Note 14, "Commitments and Contingencies" to our consolidated financial statements. We do not consider these costs to be representative of ordinary course litigation or the ongoing financial performance of our core business.
6.Represents (a) a one-time expense to terminate an intellectual property rights licensing agreement of $7.7 million for the year ended December 31, 2025, (b) personnel-related costs related to our customer service office closure of $0.2 million and $3.5 million for the years ended December 31, 2025 and 2024, respectively, (c) a one-time expense related to our IPO of $4.4 million for the year ended December 31, 2025, (d) entity restructuring costs associated with the transfer of certain intangible assets and restructuring of our wholly owned subsidiaries of $1.2 million and $2.3 million for the years ended December 31, 2024 and 2023, respectively, (e) a one-time expense to terminate our headquarters' lease of $1.5 million for the year ended December 31, 2023 and (f) non-capitalizable offering-related expenses related to our potential listing on a national securities exchange of $0.7 million for the year ended December 31, 2023. We do not consider these expenses to be representative of the ongoing financial performance of our core business.
During the year ended December 31, 2025, the decrease in Adjusted EBITDA, compared to the prior year, was driven by lower average transaction fee rate we charge to buyers and sellers on each transaction, increased customer acquisition spend to accelerate our relative market share gains and investment in new initiatives, partially offset by increased transaction volume on our platform and increased capitalization of internal-use software.
Free Cash Flow
We define free cash flow as net cash provided by (used in) operating activities less capital expenditures, which includes purchases of property and equipment, purchases of intangible assets and capitalized software development costs (excluding capitalized stock-based compensation expense). We believe that free cash flow is a meaningful indicator of liquidity for management and investors and, in particular, the amount of cash generated from operations that, after capital expenditures, can be used for strategic initiatives, including continuous investment in our business and strengthening our balance sheet. A limitation of the use of free cash flow is that it does not represent the total increase or decrease in our cash balance for the period. Free cash flow should not be considered in isolation or as an alternative to cash flows from operations and should be considered alongside our other financial liquidity measures, such as net cash provided by (used in) operating activities and our other GAAP results.
The following table presents a reconciliation of net cash provided by operating activities, the most directly comparable financial measure presented in accordance with GAAP, to free cash flow:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
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(in thousands)
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Net cash provided by operating activities(1)
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$ | 192,569 | $ | 261,487 | $ | 307,391 | ||||||||||||||
| Less: Capitalized software development costs | (31,532) | (2,625) | (2,009) | |||||||||||||||||
| Less: Purchases of property and equipment | (1,393) | (1,666) | (1,722) | |||||||||||||||||
| Less: Purchases of intangible assets | (1,455) | (2,086) | (1,706) | |||||||||||||||||
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Free cash flow
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$ | 158,189 | $ | 255,110 | $ | 301,954 | ||||||||||||||
(1) Includes $139.5 million, $147.1 million and $133.2 million of interest payments on our outstanding debt, net of cash received on the settlement of interest rate swap derivatives, for the years ended December 31, 2025, 2024 and 2023, respectively.
Liquidity and Capital Resources
As of December 31, 2025, we had cash and cash equivalents of $1,241.6 million. Cash and cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less when purchased, and are primarily comprised of bank deposits, money market funds, and cash held at online payment companies, which excludes $17.5 million of restricted cash.
On September 29, 2025, we made an early principal payment related to the 2024 USD Term Loan of $750.0 million in connection with, and using proceeds from, the IPO. Additionally, on December 16, 2025, we made an early principal payment on the 2024 USD Term Loan of $150.0 million. The paydown on September 29, 2025 was applied first to eliminate all remaining principal amortization payments that were scheduled to be paid on the principal balance of the 2024 USD Term Loan, beginning on September 30, 2025.
We expect our existing cash and cash equivalents will be sufficient to fund anticipated cash requirements for at least the next 12 months. We amended our Credit Facilities in March 2024 to extend their maturities. Our Credit Facilities mature in 2030. We expect we will be required to refinance our Credit Facilities at some point in the future. There is no assurance we would be able to obtain such funding or refinancing on acceptable terms and conditions, or at all. If we are unable to raise additional capital when desired, our business, results of operations and financial condition will be adversely affected.
Our primary requirements for liquidity are for general corporate purposes and servicing our indebtedness. To date, we have financed our operations principally through cash from operations, private placements of our redeemable preferred stock and proceeds from our credit facilities.
Credit Facilities
On March 15, 2024, we entered into the fourth amendment to the Credit Agreement to refinance the USD Term Loan B, USD Term Loan B2, Euro Term Loan B and Revolving Credit Facility (the "Refinancing"). As a result of the Refinancing, the refinanced Euro Term Loan B (the "2024 Euro Term Loan") has a maturity date of March 2030, aggregate principal balance €452.4 million and an interest rate equal to EURIBOR, subject to a floor of 0.00%, plus 5.00%. As of December 31, 2025, the interest rate for the 2024 Euro Term Loan was 6.90%. In addition, as a result of the Refinancing, the outstanding principal balance of each of the USD Term Loan B and USD Term Loan B2 were consolidated into one loan (the "2024 USD Term Loan" and together with the 2024 Euro Term Loan and the Revolving Credit Facility, the "Credit Facilities"). The 2024 USD Term Loan has a maturity date of March 2030, initial aggregate principal balance of $1,952.6 million and an interest rate equal to SOFR, subject to a floor of 0.00%, plus 4.75%. As of December 31, 2025, the interest rate for the 2024 USD Term Loan was 8.47%. After six months following the effective date of the Refinancing, we have an option to prepay part or all of both the 2024 USD Term Loan and the 2024 Euro Term Loan prior to maturity without penalty. On June 24, 2024, we repaid $24.0 million of the outstanding principal of the 2024 USD Term Loan. On September 29, 2025, we made an early principal payment related to the 2024 USD Term Loan of $750.0 million in connection with, and using proceeds from, the IPO. Additionally, on December 16, 2025, the Company made an early principal payment on the 2024 USD Term Loan of $150.0 million. The paydown on September 29, 2025 was applied first to eliminate all remaining principal amortization payments that were scheduled to be paid on the principal balance of the 2024 USD Term Loan, beginning on September 30, 2025. The principal balance of the 2024 USD Term Loan was $1,004.2 million as of December 31, 2025.
The Revolving Credit Facility initially allowed for an initial aggregate principal amount of $125.0 million, including: (i) a $30.0 million letter of credit sublimit and (ii) a $30.0 million swingline loans sublimit. On March 13, 2023, as part of the SOFR Amendment, the interest rate per annum for the Revolving Credit Facility was amended to equal to SOFR, subject to a floor of 0.00%, plus 3.61448%. On March 15, 2024, as part of the Refinancing, we extended the maturity date of the Revolving Credit Facility from February 2025 to March 2028. On June 27, 2024, we entered into the fifth amendment (as amended) to the Credit Agreement to increase the commitment under the Revolving Credit Facility, subject to certain conditions, including the occurrence of an initial public offering. On September 29, 2025, the Company met the conditions, including the occurrence of a Qualified IPO, under Amendment No. 5 related to the Revolving Credit Facility that increased the aggregate principal amount to $565.0 million, including: (i) a $120.0 million letter of credit sublimit and (ii) a $60.0 million swingline loan sublimit. The maturity date for the Revolving Credit Facility was also extended from March 2028 to September 2030. As of December 31, 2025, there were outstanding standby letters of credit in an aggregate amount of $43.1 million under the Revolving Credit Facility that we issued in connection with our appeal bond for a litigation matter and office leases. During and as of the year ended December 31, 2025, no amounts have been drawn on the letters of credit. The available balance under the letter of credit sublimit for Revolving Credit Facility was $76.9 million as of December 31, 2025.
In connection with the Refinancing, we incurred underwriting fees of 1.00% on the principal balance and other issuance costs of $4.1 million and each of the extended loans had an original issue discount of 1.00% of the principal balances.
The Credit Facilities contain customary representations and warranties, affirmative covenants, reporting obligations and negative covenants. The Credit Facilities are secured by (i) a first priority lien on substantially all of our and our domestic subsidiaries' tangible and intangible personal property, including but not limited to intellectual property and accounts receivable and (ii) a first priority pledge of 100% of our equity interests and each of our material direct, wholly owned subsidiaries limited to 65% of the voting capital stock and 100% of the non-voting stock of certain foreign subsidiaries, in each case, subject to certain exceptions.
As of December 31, 2025, we had $1,535.2 million outstanding under our term loan Credit Facilities. As of December 31, 2025, there were no outstanding amounts drawn on the Revolving Credit Facility.
Our Credit Facilities are subject to variable interest rates. Although we believe our interest rate risk management strategy will continue to mitigate any potential material impacts on our liquidity and capital resources, future interest rate increases could materially impact our business, financial condition and results of operations. For more information, see "Risk Factors-Risks Relating to Our Financial Condition and Indebtedness-Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly."
Cash Flows
The following table summarizes our cash flows for the periods presented:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
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(in thousands)
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| Net cash provided by operating activities | $ | 192,569 | $ | 261,487 | $ | 307,391 | ||||||||||||||
| Net cash used in investing activities | $ | (34,380) | $ | (6,377) | $ | (5,437) | ||||||||||||||
| Net cash provided by (used in) financing activities | $ | 71,792 | $ | (46,710) | $ | 94,133 | ||||||||||||||
Cash Flows from Operating Activities
For the year ended December 31, 2025, net cash provided by operating activities was $192.6 million, primarily resulting from a net loss of $1,905.9 million, after consideration of non-cash charges of $1,951.5 million. Net cash inflows from the change in net operating assets and liabilities of $147.0 million were primarily due to a $106.5 million increase in payments due to buyers and sellers driven by improvements in GMS, a $65.1 million increase in other non-current liabilities and a $37.7 million increase in accrued expenses. The non-cash items included in our net loss for the year ended December 31, 2025 relate primarily to stock-based compensation charges of $1,447.7 million, deferred income taxes of $356.8 million and unrealized foreign exchange losses of $91.4 million.
For the year ended December 31, 2024, net cash provided by operating activities was $261.5 million, primarily resulting from net loss of $2.8 million, after consideration of non-cash charges of $88.0 million. Net cash inflows from the change in net operating assets and liabilities of $176.3 million were primarily due to a $91.4 million increase in accrued expenses, a $73.5 million increase in accounts payable, a $30.2 million increase in payments due to buyers and sellers driven by improvements in GMS and a $19.7 million increase in other non-current liabilities partially offset by a $30.0 million decrease in other non-current assets. The non-cash items included in our net loss for the year ended December 31, 2024 relate primarily to unrealized foreign exchange gains of $40.5 million, deferred income taxes of $57.7 million, amortization of intangibles of $22.3 million and losses on derivatives of $14.2 million.
For the year ended December 31, 2023, net cash provided by operating activities was $307.4 million, primarily resulting from a net income of $405.2 million, after consideration of non-cash charges of $214.7 million. Net cash inflows from the change in net operating assets and liabilities of $116.9 million were primarily due to a $131.3 million increase in payments due to buyers and sellers driven by improvements in GMS and $51.0 million increase in other non-current liabilities, partially offset by a $25.7 million decrease in accounts payable, a decrease in other non-current assets of $14.7 million and a decrease in accrued expenses and other current liabilities of $13.9 million. The non-cash items included in our net income for the year ended December 31, 2023 relate primarily to deferred income taxes of $326.0 million, stock-based compensation expense of $34.9 million, losses on derivatives of $22.6 million, unrealized foreign exchange losses of $21.8 million and amortization of intangible assets of $21.1 million.
Cash Flows from Investing Activities
Net cash used in investing activities during the year ended December 31, 2025 was $34.4 million, which was primarily related to capitalized software development costs.
Net cash used in investing activities during the year ended December 31, 2024 was $6.4 million, which was primarily related to capitalized software development costs as well as purchases of intangible assets and property.
Net cash used in investing activities during the year ended December 31, 2023 was $5.4 million, which was primarily related to capitalized software development costs as well as purchases of property and intangible assets.
Cash Flows from Financing Activities
Net cash provided by financing activities during the year ended December 31, 2025 was $71.8 million, which was primarily comprised of proceeds of $758.0 million from the issuance of common stock in the IPO, net of underwriting discounts and commissions, proceeds from the issuance of Series O redeemable preferred stock of $254.9 million and proceeds from the issuance of Series N redeemable preferred stock of $50.0 million. This is partially offset by the repayment of long-term debt obligations of $909.8 million and payment of tax withholding obligations on vested equity awards of $86.3 million.
Net cash used in financing activities during the year ended December 31, 2024 was $46.7 million, which was primarily comprised of repayment of long-term debt obligations of $506.6 million, partially offset by proceeds from issuance of long-term debt obligations of $443.5 million in connection with the Refinancing as well as $24.0 million of proceeds from the issuance of Series M redeemable preferred stock.
Net cash provided by financing activities during the year ended December 31, 2023 was $94.1 million, which was primarily comprised of the issuance of Series L redeemable preferred stock of $115.0 million, partially offset by repayment of long-term debt obligations of $20.3 million.
Contractual Obligations
We have operating lease commitments, which are comprised of the minimum commitments for our office space. See Note 13, "Leases" to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information.
We have other purchase commitments, which primarily relate to contractual inventory costs, partnership and sponsorship fees, as well as vendor costs. See Note 14, "Commitments and Contingencies" to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information.
Off-Balance Sheet Arrangements
As of December 31, 2025, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Critical Accounting Estimates
Our consolidated financial statements and the related notes thereto included elsewhere in this Annual Report are prepared in accordance with GAAP. The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and the related disclosures at the date of our financial statements, as well as the reported amounts of revenue and expenses during the period presented. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from our estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows could be affected.
The critical accounting estimates, assumptions and judgments that we believe have the most significant impact to the preparation of our consolidated financial statements are described below. See Note 2, "Basis of Presentation and Summary of Significant Accounting Policies" of the notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information.
Revenue Recognition
Our revenue is primarily generated from the facilitation of buyers and sellers who desire to enter into a transaction to buy or sell live event tickets. Revenue consists primarily of: (i) fees charged to buyers and sellers of tickets when a transaction is executed on our platform and (ii) shipping fees charged to buyers of tickets. Fee structures can vary between jurisdictions for a variety of commercial reasons including competitive pricing and complying with local law and regulatory requirements. We charge buyers a transaction fee in addition to the price of the tickets. This fee covers the cost of maintaining our platform, guaranteeing tickets and providing customer service. Depending on the geographic market or live event, we may also charge sellers a transaction fee, which, if applicable, is deducted from the payment remitted to the seller. We provide incentives to buyers and sellers in various forms, including discounts on fees, discounts on items sold and coupons. Promotions and incentives that are consideration payable to a customer are recognized as a reduction of revenue at the time when the incentive is provided or issued to the customer.
With respect to the facilitation of buyers and sellers who desire to enter into a transaction to buy or sell live event tickets, we have identified two performance obligations related to the core services offered: (i) transaction facilitation between buyers and sellers and (ii) shipping facilitation. The determination of whether we act as a principal or an agent in the fulfillment of our transaction and shipping facilitation performance obligations is based on an evaluation of whether we control the goods and services before being transferred to the customer under the terms of an arrangement. Control includes considering whether we have primary responsibility for fulfillment, assume inventory risk and have discretion to establish prices, among other indicators. When providing transaction facilitation between a buyer and a seller, we act as an agent as we do not set prices for tickets and are not responsible for providing tickets. As such, revenue from transaction facilitation earned by us for providing access to our marketplace platform and performing listing and transaction facilitation services is recorded net of the price of the tickets and recognized at the point in time the sale is executed. As part of facilitating transactions on our marketplace platform, we provide buyers with the ability to have tickets shipped to a specified address, and sellers the ability to ship paper tickets by providing them access to our pre-negotiated shipping contracts for a fee. The shipping fee is set by us and we act as a principal for shipping facilitation and revenue is recognized at the point in time the shipping label has been provided by us to the seller. As such, payments by customers to us for shipping facilitation are recorded on a gross basis as revenue in our consolidated statements of operations, while the shipping expenses are included in cost of revenue.
In addition, to help accelerate content rights holders' adoption of our marketplace as a distribution channel for original issuance tickets, we initially entered into agreements with certain content rights holders to reduce the perceived operational burden and economic risk of utilizing our marketplace. For example, in some cases, in exchange for agreeing to list a certain number of original issuance tickets, we agreed to remit to the content rights holder a minimum amount of proceeds for that bundle of tickets. These agreements contained terms and conditions indicating that we have control over such tickets prior to the tickets being sold to a buyer. Therefore, we acted as principal with respect to the sale of those tickets, and the tickets were considered to be inventory. With respect to the sale of inventory, we identified one performance obligation, which is to transfer control of the inventory to the buyer once a ticket has been purchased. Revenue is recorded on a gross basis, based on the total sale price of these tickets, including transaction fees, and is recognized at the point in time the buyer purchases the ticket, while the inventory costs are included in cost of revenue in our consolidated statements of operations.
Ticketing marketplaces, including our platform, have general terms and conditions that require a refund to the buyer for the total amount of their ticket purchase, inclusive of transaction fees, if an event is cancelled or tickets are invalid. We determined this is not considered a separate performance obligation, but rather a stand-ready obligation to provide a return. Therefore, it is deemed an element of variable consideration, which could result in a reduction to revenue.
Revenue is recognized net of value-added taxes, sales taxes and similar taxes, and estimated cash refunds and sales credits. Revenue earned from transaction facilitation and sale of inventory that occurs during a financial reporting period is recorded net of refunds for actual canceled events not previously reserved as well as an estimate for future canceled events. We assess whether an event is likely to be canceled based on event policies and historical information, and other factors including forecasted economic conditions. The refund estimates for canceled events are determined based on historical data and market conditions. Refunds for estimated canceled events are recorded as a liability within accrued expenses and other current liabilities. If an event is canceled, the amounts due to buyers are recorded within payments due to buyers and sellers on our consolidated balance sheets.
Inventory
Inventory consists primarily of original issuance tickets for which we act as principal with respect to their sale. All inventory is valued at the lower of cost or net realizable value, determined by the specific identification method. A provision is recorded to adjust inventory to its estimated net realizable value when inventory is determined to be in excess of anticipated demand trends. Inventory write-downs are presented in cost of revenue in the consolidated statements of operations.
Stock-Based Compensation
We issue stock-based compensation awards to employees, officers, directors and non-employees in the form of RSUs, stock options, warrants, and restricted stock. We measure and recognize compensation expense for stock-based awards based on the fair value of the award on the date of grant.
The fair value of restricted stock and RSUs that vest based on service and performance conditions is measured using the fair value of our common stock on the date of the grant. The fair value of stock options and warrants that vest based on service and performance conditions is measured using the Black-Scholes option pricing model on the date of grant. The Black-Scholes option pricing model requires the input of highly subjective assumptions, including the risk-free interest rate, the expected term of the award, the expected volatility of our common stock and the expected dividend yield of our common stock. The Black-Scholes assumptions are summarized as follows:
• Fair Value of Common Stock.Prior to the completion of the IPO, the fair value of the shares of common stock underlying our stock-based awards was historically determined by our board of directors as there was no public market for the underlying common stock. The Company's board of directors determined the fair value of our common stock by considering a number of objective and subjective factors including input from management, contemporaneous third-party valuations of our common stock, the valuation of the comparable companies, sales of our common stock and redeemable preferred stock to outside investors in arms-length transactions, our operating and financial performance, the lack of marketability and general and industry-specific economic outlook, amongst other factors. Upon the completion of the IPO, the fair value of the shares of common stock is based on the closing stock price as quoted by the principal exchange on which the shares are listed.
• Risk-Free Interest Rate.The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon bonds with maturities equivalent to the option's expected term.
• Expected Term.The expected term of stock options or warrants has been determined either using the simplified method, which uses the midpoint between the vesting date and the contractual term, or the contractual term.
• Expected Volatility.Prior to the Company having sufficient historical trading history, the expected volatility is derived by referencing the implied historical volatility of comparable publicly traded entities over a period equal to the expected term of the stock options. After the Company has sufficient historical trading history, the expected volatility will be based on the Company's implied historical volatility over a period equal to the expected term of the stock options.
• Expected Dividend Yield.We do not anticipate paying any cash dividends in the foreseeable future and, therefore, use an expected dividend yield of zero.
The fair value of stock options and RSUs that vest based on market conditions is measured using a Monte Carlo simulation on the date of grant. The Monte-Carlo simulation method incorporates the possibility that the market-based condition may not be satisfied, and various highly subjective assumptions, including expected volatility of our common stock, expected term, risk-free interest rates and, for awards granted prior to the completion of the IPO, the fair value of the common stock.
The assumptions used to determine the fair value of the awards represent management's best estimates. These estimates involve inherent uncertainties and the application of management's judgment. The fair value of awards that vest based only on continuous service is recognized on a straight-line basis over the requisite service period of the awards. The fair value of awards that vest based on performance or market conditions is recognized over the requisite service period using the accelerated attribution method. We determine the requisite service period for awards that vest based on market conditions by comparing the derived service period to achieve the market-based vesting condition and the explicit time-based service period, using the longer of the two service periods as the requisite service period. Stock-based compensation expense is only recognized for awards with performance conditions once the performance condition becomes probable of being achieved. We account for forfeitures of stock-based awards when they occur.
Changes to the terms and conditions of a stock-based compensation award that change the fair value, vesting condition, or classification of an award are treated as modifications. A modification is treated as an exchange of the original award for a new award. When the terms of a stock-based compensation award are modified, the minimum expense recognized is the grant date fair value of the original award, provided the original vesting terms of the award are met. An additional incremental expense is measured on the date of the modification for any increase in the total fair value of the award.
Stock-based compensation arrangements accounted for as liability-classified awards are remeasured to fair value at the end of each reporting period through the settlement date. Changes in the fair value of the liability-classified awards are recognized during the period in which the changes occur.
Impairment of Goodwill and Indefinite-Lived Intangible Assets and Other Long-Lived Assets
Goodwill and Indefinite-Lived Intangible Assets
We evaluate indefinite-lived intangible assets, including goodwill and trademarks and trade names, annually during the fourth quarter for impairment or more frequently if events and circumstances indicate that it is more likely than not that the goodwill or other indefinite-lived intangible assets are impaired.
Events that could indicate impairment of goodwill and other indefinite-lived intangible assets that trigger an impairment assessment include, but are not limited to, adverse economic market conditions, long-term declining industry outlook conditions, entity-specific financial underperformance and other adverse legal and regulatory events. We perform our goodwill impairment assessment at the reporting unit level. Our reporting unit is aligned with the organizational structure of our business and we have concluded that we have a single reporting unit.
We perform impairment testing for goodwill or other indefinite-lived intangible assets using a two-step process. First, a qualitative assessment using relevant events and circumstances is performed to determine whether it is more likely than not that the fair value of a reporting unit or the fair value of an indefinite-lived intangible asset is less than its carrying value. Second, if the qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying amount, a quantitative assessment is required. We may also bypass the qualitative assessment for a reporting unit or indefinite-lived asset and directly perform a quantitative assessment.
When a quantitative assessment is performed, the fair value of the reporting unit or the fair value of an indefinite-lived intangible asset is compared with its carrying amount. If the carrying value of an indefinite-lived intangible asset exceeds its fair value, then such indefinite-lived intangible asset is written down by an amount equal to the excess of carrying value over fair value. If the carrying value of a reporting unit exceeds its fair value, then we recognize a goodwill impairment for the amount by which the reporting unit's carrying value exceeds its fair value, limited to the total amount of goodwill allocated to the reporting unit.
To evaluate goodwill and indefinite-lived intangible assets in a quantitative impairment assessment, the fair value of the reporting unit or the fair value of an indefinite-lived intangible asset is estimated using income and market approaches. The discounted cash flow method, a form of the income approach, uses expected future cash flows, discounted using a market participant discount rate. Failure to achieve these expected results, or changes in the discount rate or market pricing metrics may cause a future impairment of goodwill at the reporting unit or an indefinite-lived intangible asset.
Long-Lived Assets
We evaluate long-lived assets held and used for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset group may not be recoverable. Events that could indicate impairment of long-lived assets that trigger an impairment assessment include, but are not limited to, adverse economic market conditions, long-term declining industry outlook conditions, entity-specific financial underperformance and adverse legal and regulatory events. An asset group held and used is considered impaired to the extent its carrying amount exceeds the undiscounted future net cash flows the asset group held and used is expected to generate. Measurement of any impairment loss is based on the excess of the carrying value of the asset group over its fair value. An asset group to be disposed of is reported at the lower of its carrying amount or fair value less costs to sell.
Interest Rate Derivatives
We only use derivatives for risk management purposes. We do not use any derivative instruments for trading or speculative purposes. We use interest rate swaps to manage interest rate risk on future cash flows, with certain of these swaps designated and accounted for as cash flow hedges until December 15, 2025, when we voluntarily discontinued hedge accounting. Derivative instruments are recognized on the consolidated balance sheets at fair value each reporting period. Gains and losses resulting from changes in the fair value of derivative instruments not qualifying as a cash flow hedge are recognized within (losses) gains on derivatives in the consolidated statements of operations. We classify recurring cash flows related to derivative instruments as operating activities in the consolidated statements of cash flows.
The criteria used to determine if hedge accounting treatment is appropriate are: (a) formal designation and documentation of the hedging relationship, the risk management objective and hedging strategy at hedge inception, (b) eligibility of hedged items, transactions and corresponding hedging instrument and (c) to receive hedge accounting treatment, cash flow hedge must be highly effective in offsetting changes to expected future cash flows on hedged transactions. At inception and on a quarterly basis, effectiveness of designated hedges is required to be assessed to ensure that the cash flow hedge remains highly effective. If the derivative instrument is designated as a cash flow hedge, gains and losses resulting from changes in fair value are deferred in unrealized gains (losses) on cash flow hedges, net of tax in accumulated other comprehensive income (loss) until the hedged transaction affects earnings and is presented within interest expense in the consolidated statements of operations. Until it becomes probable that the forecasted cash transactions will not occur after the discontinuation of cash flow hedge accounting, the amounts recognized in accumulated other comprehensive income (loss) prior to such discontinuance are reclassified to earnings when the forecasted transactions affect earnings. The Company classifies payments associated with the partial or full termination of interest rate swaps as financing activities in the consolidated statements of cash flows.
See Note 12, "Interest Rate Derivatives" to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information.
We recognize the estimated amounts we would receive or pay upon a termination of interest rate derivatives prior to their schedule expiration dates as assets or liabilities measured at fair value. These assets and liabilities are recognized as Level 2 within the fair value hierarchy as they are measured based on observable inputs. See Note 3, "Fair Value Measurements" to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information.
Loss Contingencies
We are involved in various claims, litigation, fines and penalties that arise in connection with our business. We record a liability in accrued expenses and other current liabilities and other non-current liabilities on the consolidated balance sheets when we believe that it is both probable that a loss has been incurred and the amount can be reasonably estimated. If we determine that a loss is reasonably possible and the loss or range of loss can be estimated, we disclose the possible loss in the consolidated financial statements. If we determine that a loss is either probable or reasonably possible, but the loss or range of loss cannot be estimated, we disclose that fact in the consolidated financial statements. Significant judgment is required to determine both probability and the estimated amount.
We review the developments in our contingencies that could affect the amount of the provisions that have been previously recorded, and the matters and related reasonably possible losses disclosed. We make adjustments to the provisions and changes to our disclosures accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and updated information. Significant judgment is required to determine both the probability and the estimated amount of loss. The outcomes of litigation, indirect tax examinations and investigations are inherently uncertain. Therefore, if one or more of these matters were resolved against us for amounts in excess of the estimated amounts, our consolidated statements of operations, consolidated balance sheets, or consolidated statements of cash flows, including in a particular reporting period in which any such outcome becomes probable and estimable, could be materially adversely affected.
We recognize estimated losses from contingencies in general and administrative expense in the consolidated statements of operations. Legal fees are expensed as incurred. See Note 14, "Commitments and Contingencies" to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information.
(Provision) Benefit for Income Taxes
We are subject to income taxes in the U.S. (federal and state) and numerous foreign jurisdictions. Tax laws within each jurisdiction are subject to interpretation of the related tax regulations and administrative practices, and may be subject to significant change, with or without notice, due to economic, political or other conditions. Judgment is required in determining our (provision) benefit for income taxes and deferred tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws.
We utilize the asset and liability method of accounting for income taxes under which deferred tax assets and liabilities arise from the temporary differences between the tax basis of an asset or liability and our reported amount in the consolidated financial statements, as well as from net operating loss and tax credit carryforwards. In establishing deferred income tax assets and liabilities, management makes judgments based on the enacted tax laws and published tax guidance applicable to us as well as the amount and jurisdiction of future taxable income. Deferred tax assets and liabilities are recorded and the need for valuation allowances is evaluated to reduce the deferred tax assets to amounts expected to be realized. We regularly assess our ability to realize deferred tax assets on a jurisdiction-by-jurisdiction basis, which is highly judgmental and requires subjective weighting of such evidence. The amount recognized is measured as the largest amount of benefit that has a greater than 50 percent likelihood of being realized.
In the fourth quarter of 2025, we determined that it was not more likely than not that our U.S. federal and state deferred tax assets and certain of our foreign deferred tax assets were realizable. In evaluating the realizability of these deferred tax assets, we considered all available evidence, both positive and negative. As of December 31, 2025, we were in a three-year cumulative loss position, which is considered significant negative evidence that is both objective and verifiable. Therefore, as of December 31, 2025 we recorded a valuation allowance of $526.5 million against our U.S. and certain foreign net deferred tax assets. We will continue to assess our ability to realize deferred tax assets on a quarterly basis. An increase or decrease in the valuation allowance would result in a respective increase or decrease in our effective tax rate in the period the increase or decrease occurs.
We account for uncertainty in income tax positions by recognizing a tax benefit when a tax position is more likely than not to be sustained upon examination by the taxing authorities. The amount recognized is measured as the largest amount of benefit that has a greater than 50 percent likelihood of being realized upon ultimate audit settlement.
The evaluation and assessment of our tax obligations are inherently subjective due to the complexity and uncertainty of these matters and the administrative, regulatory or judicial processes in certain jurisdictions. While we believe that we have adequately reserved for our uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be different. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the (provision) benefit for income taxes and the effective tax rate in the period in which such determination is made.
Recent Accounting Pronouncements
See Note 2, "Basis ofPresentation and Summary of Significant Accounting Policies" to our consolidated financial statements included elsewhere in this Annual Report for more information.
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