Michael Rapino - CEO Kathy Willard - CFO Joe Berchtold - COO

Amy Yong - Macquarie Jason Bazinet - Citi David Joyce - Evercore ISI Doug Arthur - Huber Research John Healy - Northcoast Research Rich Tullo - AFCO Ben Mogil - Stifel Brandon Ross - BTIG

Please stand by. Good afternoon. My name is Jessica, and I will be your conference facilitator today. At this time I would like to welcome everyone to the Live Nation Entertainment First Quarter 2016 Earnings Conference Call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. Before we begin, Live Nation has asked me to remind you that this afternoon's call will contain certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ, including statements related to the company's anticipated financial performance, business prospects, new developments and similar matters. Please refer to the Live Nation's SEC filings, including the risk factors and cautionary statements included in the company's most recent filings on forms 10-K, 10-Q, and 8-K for a description of risks and uncertainties that could impact the actual results. Live Nation will also refer to some non-GAAP measures on this call. In accordance with SEC Regulation G, Live Nation has provided a full reconciliation of the most comparable GAAP measure in their earnings release. The release, reconciliations and other financial or statistical information to be discussed on this call can be found under the Investor Relations tab on, investors.livenationentertainment.com. It is now my pleasure to turn the call over to Michael Rapino, President and Chief Executive Officer of Live Nation Entertainment.

Thank you. Good afternoon and welcome to our second quarter 2016 conference call. Live Nation accelerated growth in the second quarter with revenue up 23%, AOI up 28%, free cash flow up 22%. Each of our core businesses concerts, advertising and ticketing contributed to this strong performance with revenue and AOI up double digits in each business. Our concerts business is our flywheel, attracting 19 million fans to shows this quarter, which in turn also drove AOI growth in our ticketing, advertising and on-site businesses. We have built the industry's most scalable and unparalleled live platform, bringing over 500 million fans in 40 countries to live events each year. With concert ticketing sales running well ahead of last year, we are confident that 2016 will be another record year of results for Live Nation overall and for each of its core divisions. Starting with the concerts business, through mid-July we have sold over 50 million tickets for our concerts that take place this year, pacing 17% ahead of last year this point. As a result, in the second quarter we grew revenue by 26% and AOI by 81% in each our core business. We continue to be the leading promoter in the world, having created a business model that is effective at attracting artists from the club to the stadium level, enabling us to then make money in our high margin on-site, ticketing and advertising businesses. This year we are growing our concerts business across all channels, with an 18% increase in confirmed shows in stadium, arena and amphitheater while also adding more festivals to our portfolio and continuing to expand our club and theater business. This growth is being delivered both in North America and internationally with concerts and festivals projecting mid-to-high single digit growth in fan attendance for the full year. At the same time, we are seeing the benefits from improving the on-site fan experience. For the quarter, we delivered double-digit growth in net revenue per fan at our amphitheaters, increasing our contribution margin by over $2 per fan. Coming on top of last year's growth of $0.80 per fan, we are seeing the results from improving our food and beverage offering and expanding our products to provide more options for high-end customers. And our artist management business continued to be strategic to our overall business, providing a strong pipeline of shows and supporting our growth initiatives. In the sponsorship & advertising business, we continued to see strong growth for the quarter with revenue up 17% and AOI up 12%. Live Nation's ongoing success in growing its high margin advertising business is based on its unique scale and breadth in the live experience space. No other advertising platform can match our 60 million on-site engaged fans along with 80 million monthly unique visitors to our websites, and over 500 million direct connections with fans attending events each year. From festivals to branded content to exclusive access to tickets and events, the combined Live Nation concerts and Ticketmaster platforms reached an audience at a level no other music or online company can match. As a result through mid-July contracted net revenue is up 16% and we have sold over 85% of our planned advertising inventory for the year. And because of our platform's unique positioning and demonstrated effectiveness, our Live Nation sponsors continue to renew and expand their commitment to our platform. As of the end of the second quarter, we had roughly 50 sponsors projected to spend over $1 million with us this year, with a cumulative spend growth of 18% to over 200 million for the year. With both sponsorship and online advertising increasing year-on-year, a strong pipeline of committed business, at this point we are confident that we will deliver AOI growth this year consistent with the past several years. Ticketmaster continues to be the leading global ticketing marketplace for the 25 billion in total GTV annually for all of its ticket processed. And after adding five more countries this quarter we offer it in 27 countries worldwide. This quarter we extended our leadership to 14% growth and total GTV of 5.7 billion, an overall Ticketmaster revenue growth of 23% and AOI growth of 20% for the quarter. Our secondary product has delivered GTV growth of over 20% for the ninth consecutive quarter, and it is up 49% year-on-year in the second quarter, to over 300 million. One key component for continuing Ticketmaster's growth is the opening of our marketplace to sell tickets on other distribution platforms, driving increased conversion and tapping into additional fan bases. Through the deployment of APIs with key partners such as Facebook, BandsinTown and Broadway.com, and Groupon we've increased sales by 30% in the first half to more than 5 million tickets. Going forward, we see these and other distribution partners, including teams and artists, as a key way to extend our reach and increase flexibility of our clients and continue selling more tickets powered by Ticketmaster. Underlying this success is the continued expansion of our venue client base. During the quarter, we added nearly 400 new clients globally, making us confident that for the seventh consecutive year we will have a net renewal rate of over 100%. With the TM ONE software platform in full rollout, we are delivering an improved workflow for the venues while at the same time selling more tickets, pricing them better, and reducing Ticketmaster's cost base. As a result of all this, in 2016 we have already had five of the top ten GTV months globally in Ticketmaster's history. As well as Ticketmaster has done this year, I have even greater expectations going forward. Every one of our ticketing verticals has tremendous runway for growth. We now have a technology platform which enables us to deploy web and app products faster and more flexible, and opening our platform is powering even more sales. This, combined with a strengthening value proposition to our growing base of venue clients, positions Ticketmaster for ongoing growth. After our strong performance in the first half of the year, we expect 2016 to be another year of record growth and record results for the company. Based on our key indicators in concerts, sponsorship and ticketing, we expect revenue and AOI growth in each of these businesses and overall for Live Nation this year. With that I'll turn the call over to Joe to take you through additional detail on divisional performance.

Thanks, Michael. Looking at our business segments, first Concerts. Live Nation Concerts revenue in the second quarter was up 26% and AOI was up 61%. The revenue growth was driven by a 22% increase in attendance for the quarter led by stadium and amphitheater shows. Stadium attendance was six times than in the second quarter of last year with almost 3.5 million fans attending 83 shows in what is shaping up to be our largest stadium year ever. Amphitheater attendance was up 17% to almost 4.5 million fans. And while both North America and international attendance were up double-digits, international growth was particularly strong at 45% for the quarter. And looking forward to the second half as Michael said ticket sales for shows this year are up 17% through July 18th and we've already sold over 50 million tickets for shows this year. Our pipeline of shows in the second half particularly stadiums and arenas that are covering all groups including amphitheater, clubs and theaters and festivals continues to be very strong and we expect to increase our show counts for about 26,000 this year. Given the line of shows are larger venues this year we're confident that we'll deliver high single digit attendance growth for the year. And as Michael also mentioned the success we've had growing per cap profitability at the amphitheaters this year, this growth was led by increased concession sales but also benefiting from higher parking, service charge and merchandise revenue as we continue optimizing revenue per fan. On concession, we worked with legends to improve the overall offer and introduce new concept such as grab and go stands while expanding our high end offers with dedicated wine bars and improved VIP rooms. With this momentum across the Board, we expect continued strong growth in our concerts AOI for the year. At Artist Nation, revenue was flat and AOI improved slightly in the second quarter and we expect similar trends for the full year. Turning to our sponsorship and advertising business, ad revenue was up for the second quarter by 17% and AOI grew by 12% continuing its strong performance from the first quarter and growing double digits comping against the very strong growth in the Q2 of last year. The second quarter growth was waged sponsorship this quarter with AOI up 14% driven by new strategic sponsors, increased activity with existing sponsors and increased festival activity. Online advertising is also continuing its steady growth within AOI increase of 7%. At this point with over 275 million in sponsorship and advertising net revenue now contracted for the year, we're confident we will deliver AOI growth consistent with the past few years. Finally, Ticketmaster, for the quarter Ticketmaster revenue was up 23% and AOI up 20%, primary ticketing fee bearing GTV for the quarter was up 20%, strong concerts activity accounted for the majority of our increase in the quarter and growth was strong globally with North America up 26% and international up 5%. Secondary GTV was up 49% for the quarter with growth of 48% in North America and 58% in international markets. The business continues to benefit from our strategy of aligning with content providing fans with their full set of choices with transparency. As a result, we're continuing to see much high conversion rates on integrated inventory events than those with primary only options up now to 50% higher for the first half of this year. And we remain focused on great [ph] rate band product, key amongst these as delivering the best mobile experience for fans. From our continued lab and app improvements, we've increased mobile sales by 47% this quarter year-over-year, now accounting for 27% in overall ticket sales. And given the ticket pipeline and momentum we have in secondary ticketing to the full year, we expect to deliver a high single digit AOI growth with flat year-over-year margin. In summary now more than half ways for the year, we're confident that 2016 will be another year of record top line and bottom line results overall and for each of our core businesses. We also expect record pre-cash flow with AOI conversion into free cash at about the same rate as last year. From a time perspective, we ended up heavier weighted into Q2 from both concerts and ticketing perspective and we thought at the start of the quarter and at this time expect most of our remaining growth for the year to come in the third quarter. On FX during the second quarter, we continue to see a 1% to 2% impact on our revenue and AOI with Q2's impact largely coming from the pound dollar devaluation in the period. If the current forecast of the FX rates hold true, the total FX impact this year would continue in the 1% to 2% for both revenue and AOI. I'll now turn the call over to Kathy to go through more on our financial results.

Thanks Joe and good afternoon everyone. I will start with our results for the second quarter. Revenue was up 23% to 2.2 billion and AOI of 28% to 181 million. On a constant-currency basis revenue was 2.2 billion and AOI was 183 million. And free cash flow was 113 million for the quarter, an increase of 22%. Our Concerts deferred revenue for tickets sold for events in the future at our owned or operated venues is one of our most important leading financial indicators. And as of the end of the second quarter, our deferred revenue was 1.2 billion, an increase of 12% over the 1 billion in June of last year. The majority of our revenue growth in the second quarter was driven by significant stadium and amphitheater activity concerts and higher primary and resale volume in ticketing. This growth in concerts and ticketing also largely drove the 28% increase in AOI over last year. Our operating income in the second quarter was 74 million. 76% higher than the 42 million we reported last year driven by the increase in AOI. And our net income for the quarter was 38 million compared to 15 million in the second quarter of 2015. In the second quarter our other expense included net foreign exchange rate losses from revaluation of 7 million compared to 2015 which included a gain related to acquisitions of 10 million. Moving to the results for the first half of the year, revenue was up 17% to 3.4 billion and AOI up 20% to 254 million. On a constant-currency basis revenue was 3.4 billion and AOI was 257 million. And free cash flow was 123 million, an increase of 5% over last year. The majority of our revenue growth was driven by concerts largely from the increase in the number of stadium shows in North America and Europe as well as strong attendance growth in our amphitheaters. Ticketing revenue for the first half of the year was up from increased primary as well as resale volume. And sponsorship and advertising revenue was 15% as we continue signing new clients, growing our online business and increasing festival sponsorship. The 20% growth in reported AOI for the first half of 2016 was largely from our strong concerts activity and ticketing volume. All of our segments delivered growth in AOI during the first six months. Operating income was 41 million versus 80 million in the first half of 2015 driven by the increase in AOI. And our net loss for the first half was 7 million, an improvement from the net loss of 43 million last year. For the six months our other expense included net foreign exchange rate gains from revaluation of 1 million compared to 2015 which had net foreign exchange rate losses of 21 million. For the full year we currently estimate that we will record 50 million of accretion of redeemable non-controlling interest which impacts the calculation of earnings per share. This accretion is related to certain put/call arrangements from completed acquisitions where the value of the put is recognized over time to APIC. And finally we currently expect the amortization of non-receivable ticketing contract advances for 2016 to be in line with the total amount in 2015. Moving to our balance sheet, as of June 30, we had total cash of 1.5 billion, including 606 million in ticketing client cash and 759 million in net concert event related cash leaving a free cash balance of 148 million. Cash flow from operations was 511 million compared to 362 million in the first half of 2015, with the increase driven by our higher event related deferred revenue and AOI growth. Free cash flow was 123 million in the first half of 2016 as compared to 170 million last year. This increase came from our higher AOI, less increase maintenance CapEx and timing of distributions to our partners. As Joe mentioned, for full your 2015 we currently expect our free cash flow as a percentage of AOI to be similar to what it was in 2015. Our total capital expenditures were 77 million for the first six months with approximately half of that on revenue generating items. We currently expect total capital expenditures to be approximately 175 million to 180 million for the full year in 2016 in line with our previous guidance of about 2% of revenue with about 60% of that overall spend to be spent on revenue generating CapEx. As of June 30th, our total net debt was 2 billion and our weighted average cost of debt was 4.3%. Thank you for joining us today and we will now open the call for questions. Operator?

Thank you. [Operator Instructions] And at this time, we will take our first question from John Janedis with Jefferies.

Martha [ph] on for John. Just wanted to talk about international strategy, you've bought Big Concerts earlier this year and then ticket hour earlier this year, given the scale, do these allow you to enter adjacent countries or regions and are the economics of sport ticketing different outside of the U.S.? Thank you.

So the Big Concerts again would just be what we've been doing for many years in the major cities around the world that are now becoming ongoing regular places for big artist to tour, we want to make sure that we have a local office so we can capture all of the revenue and economics when that tour comes to town. So Big Concerts in South Africa or Cape Town, has been the leader forever and one of our partners and now we are able do a deal where we can put our proper base Live Nation business there and now build out the [indiscernible] of ticking and sponsorship. So you'll see that happening over the year, you’ll see that continue to happen where we look for the leading promoter number one or two in that market and then use our scale to accelerate that business and make it an accretive acquisition. Ticket hour is almost an acqui-hire [ph] in the sense, it brought some advanced ticket sport software to our international business same economics over here in America and the servicing obviously the soccer leagues versus the pro sports here. And we were little void in our software in terms of sport over there, so this helped us to plug a whole and provide us a better overall solution for our soccer leagues in Europe.

We'll take our next question from Amy Yong with Macquarie.

Thanks. Two questions. So first on the revenue per fan contribution, it looks like it more than doubled. Do you think it could double again in the next 12 to 24 months? Where do you think it could go and does it ultimately expand concert margins? And my second question is on this digital opportunities that you have laid out. You now have Yahoo!, Vice, it looks like you are partnering up with Hulu on the VR front and I was just wondering how big you think these deals could be ultimately?

I mean on the onsite I mean was not given in the guidance or exact mix here, but I think we've said out loud from our different presentations that we think is going onsite is a huge opportunity. We've been underdeveloped versus kind of the best in the league, we looked at the sports companies and different venues we've showed in the past. So, yes, we think that we have huge opportunity to keep growing our per head revenue business or CM business annually for the next many years to come because we think we'll probably at the lower end on a per head versus most of the sports leagues here in Europe and as we invest in higher end lines, better products, grab and go stores that we have now onsite, better VIP hospitality we're seeing that continually tick in to that $2 that we reported today. So, we think growth will continue for multiple years on onsite CM as we excel our offering. Digital, you and I have talked, Amy, about the digital overall. The digital is just a continual expansion of the ad unit for our business. And the reason we've been able to continually grow our core advertising sponsorship business for the last multiple years is we want to keep offering our sponsors a wide variety of onsite to kind of online offering. So, having more originally I think it was Yahoo! when we started. Having more ways that we're distributing content on a digital basis, from Snapchat to Hulu to VR, using all of the different distribution arms as kind of the publisher of that live experience. We think that it'll be a key foundation of ad unit to keep given our double-digit growth in our core sponsorship advertising business.

[Operator Instructions] We'll go next to Jason Bazinet with Citi.

I just had two questions. Maybe the market is just grasping for things to get excited about as it relates to VR but as a layman, this seems like a very big opportunity, but it seems if I'm interpreting your rhetoric correctly more as just sort of a modest -- not a big monetization driver going forward. I was wondering if you could just explain that because it seems like it could be big, but you don't seem to share that view. My second question is on the $150 million on-site revenue opportunity you guys have cited for the next few years, can you just put a little bit of color around what has to happen? In other words, is it infrastructure that has to get put in your on-site facilities? Is it vendors that need to get swapped out? What is it that is happening behind the scenes that causes that ramp to happen? How much of it is in place today?

I think specifically to your VR, listen, we believe at the core why our business is growing and it's going to have a long run way of growth is experiential onsite is the magic. So, the 22 year old that's going to Lollapalooza this weekend or the 52 year old going to Guns N' Roses reunion this weekend is a magical moment and it's much like going on vacation is lot better than watching a video. So, we do believe that the moat around the castle and the most advantaged kind of offering we have is our scale in live and live experiential, on-site where you get the goose bumps, you experience with your friends and make those Kodak moment, has huge opportunity forward for us. Now of course when virtual VR comes, can we do better ways to bringing the guns and roses show to you in your living room in a more dynamic mechanism than a DVD or a current TV? Sure, and we think those will be great ways to distribute that show make it into some content and help us deliver some advertising. But I had not been, even been in big proponent who is going to convince you that anyway we're going to that take Guns and Roses and have a big up sell at home pay per view or selling that to our show, no matter how dynamic it is on its own. I think it is a great content to extent the show first and foremost the biggest advantage to us is it helps us sell more tickets to the later shows and delivers it some advertising reach and scale beyond the onset. So I think it's great, I think it's great for the industry, will be incredible, ad unit, will be incredible way to sell the concert experience. But most of the monetization is always going to be connected to the onsite.

And Jason just to the second point on the $150 million of incremental onsite revenue, again to dimensionalize that there is roughly 30 million fans sending our amphitheaters festivals, theaters and clubs so we're talking about roughly $5 per fan incremental revenue from the numbers that Michael gave you fairly with our amphitheater through the type of products introductions that we've made, we’re well on our way in terms of making progress again that number. And I think he also gave you a feel for the types of products that we need to be rolling out that give you a better experience for everybody on the food and beverage opportunity and then particularly at the high end to the provide VIPs experiences and just some higher end products that can be purchased. So none of these are big capital or big complexity in order to do, but there is just product developments and rollout and iterations against what products are working, which one aren't, taking the lessons that we've gotten from our amphitheater this summary and bringing those to festivals and theaters and clubs to get that overall $150 million number.

To finish that up, I would say with our core kind of strategy that needed to be worked on was just a staffing of the skill set. So when we brought over [indiscernible], we kind of created an upper end vision that is focusing on as we kind of call -- we do a good job of getting 70 million into the venue, but just like first calls has come back on airline, we needed to have a decided unit innovatively best can practice thinking about the high end part of the business and bringing better products, creating products packages bundles, travel packages, tequila, et cetera. So first we just have to -- we needed to spend more time on the right skill set and this summer we're very excited about bunch of the program we're testing.

We'll now go David Joyce with Evercore ISI.

Couple of questions, first, related to your UK exposure, it was late in the second quarter when you had that Brexit surprise. What is that doing to the consumers or the fans from your perspective? The market is roughly 10% of your revenue? And then secondly, if we could discuss kind of what the opportunity is for the Tickethour acquisition. I know you mentioned you get some advance software from that they have but is there any plan as they roll out some of the Ticketmaster products onto what they are doing?

So, on the first on the UK exposure we've seen zero impact on fan demand in the UK as it relates to the Brexit or any of those concerned. So, absolutely none and yes all of that happened late in the second quarter. But even our forward rates as I mentioned which show roughly flat to bit of decline in the pound still has us at the 1% to 2% for the year. So, we're not seeing anything in terms of either the demand or the translation economics that has us concerned at this point. In terms of Tickethour a 100% the plan is that the Tickethour is integrated into our European Ticketmaster operations and it is the backbone that serves the soccer, rugby and other major sports league through Europe. Again the counterpart to what we have in the U.S. that would serve football, basketball, hockey and so on. So, yes it is to be integrated within Ticketmaster.

[Operator Instructions] We'll go next to Doug Arthur with Huber Research.

Joe, you had such a blowout in the concert division in the second quarter and you made a comment that some of that may have stolen from the third quarter. I'm just trying to get a handle on your sense of momentum in the seasonally biggest quarter of the year. I mean obviously it is not going to be up 26% I assume on the top line. But is the pipeline still fairly robust going into the third quarter? I am just trying to get a better sense of what is going on.

100%, we expect third quarter to be very strong, record third quarter for us. I think we simply just saw even part of it was Ticketmaster on sale timing even stronger in Q2 than we expected and part of it is just some of our show timing. So, nothing that would be a lost momentum going into Q3, you can tell from some of our numbers that where we're at today in terms of sold versus the guidance we gave you on where we end up. But yes, still a very strong third quarter.

And just as a corollary, I mean historically there has been some linkage between strong touring activities in Artist Nation at least on the merchandise side and I know the business model there has changed. But how come Artist Nation can't kind of kick into gear here?

It's really just I mean -- frankly in part a timing issue and when different tours are out as we saw bit of improvement this quarter, we'll see a bit more improvement we think continuing but it's not a scale business like our businesses are scale businesses, it's job shop business. So, when you make some of these improvements in the amphitheater and you have that then rolled out to 15 million people, we just see a very different scale of impact than you see in a job shop type environment.

We'll go now to John Healy with Northcoast Research.

Joe, I just wanted to kind of ask a question about the outlook that you guys provided. When I look at the commentary regarding the outlook for the concert business I think previously in the supplemental you were talking to double-digit growth in concert AOI and the verbiage changed a little bit. I don't want to be too nitpicky but was just wondering compared to what you felt about the concert business three months ago, has your outlook gotten or better, stayed the same, gotten a little bit worse? Just trying to understand the overall feel on the back of the strong 2Q that you had?

I think the overall feel is very optimist, very positive, feel better now than we did three year months, it's been a very great Q2 and we expect the great Q3.

Okay. Great, and I just wanted to ask on the Artist Nation side of things, you talked a couple of quarters ago about getting a little bit more visible on the sports side of the business. I was just kind of curious to know how that initiative is progressing and with that initiative, is that one of the reasons we are not maybe seeing the Artist Nation AOI kind of pick up? Is there a decent amount of spend there? I'm just trying to understand a little bit more just what is going on with the cost structure there?

It's going very well in terms of the Artists that are being signed and we’ve had some great successes some of the headlines clients like the Kevin Durants. It is not a cheap business to enter and the economics do come overtime in that one. So absolutely that would be a piece of what would be muting some of the overall Artists Nation performance.

And we'll take question from Rich Tullo from AFCO.

Congratulations on the quarter, it looks like things are really humming in the concert industry. In terms of geopolitical, it doesn't look like you are seeing any influence by what is going on. Is that the case or is it the U.S. is just very robust right now?

I think you're right Rich, at this point, we are seeing very robust demands still globally, it's been various events going on around the world on a political and otherwise standpoint, but thus far we haven't seen any impact on our demand, current show, shows down the road of the on sale and really nothing that we can discern.

And then by genre, is there anything moving the bar and taking over from something that was strong last year just to get a feel for how it is going?

Our philosophy is that we believe we're operating a level. We're going to be number one in all of the genre and our other markets we operate in across all types of buildings. So we haven't any major shifts in genre, we continue to see a very wide set of genres continuing to have strong demand from EDM to country to pop to hip hop to classic rock, but really nothing that has shifted dramatically recently.

And then in terms of digital, how should we be looking at the opportunity set over the next couple of years? Is it the same type of opportunity set with partnerships with groups such as Vice and Yahoo which is now part of Verizon or do you think that there is something else to do?

We think we've making strong measured progress in our mission. Our mission is, we have 25,000 shows in all of these festivals occurring, can you create content and distribute it and publish it to the growing distribution platforms, one to drive your core business and two to achieve some new ad units. And we think we've been making great progress with lots of different partners, we'll continue to see announcements that say we're going to stream these 20 shows on this platform or do VR on that platform or create some behind the scenes document commentary on online to Facebook's, to Twitter's etc. So, I think you'll see more the same I think the progress was made is that we're very credible now with most distributors. Most distributors want to meet with us and talk about can we bring that great live content to our platform with either being a live stream or behind the scenes or live documentaries or artist interviews, access behind the scenes at festivals. So, I think we've been moving very nicely and we're very pleased with our progress and we'll continue to do more content on platforms and drive more advertising.

We'll now take our next question from Ben Mogil with Stifel.

So one on the business and one on the numbers. On the business, given some of the geopolitical issues that are going on out there, are you seeing any kind of change in insurance costs at the venues that you either own or operate, are you seeing any kind of need for greater staffing? I'm kind of curious if you are seeing that change at this point in time?

This is Joe. First of all in terms of the insurance that's all down the road, if anything certainly we've got our policies in place now for this year and haven't seen changes for this year, but that's all to be determined. In terms of our security it’s certainly a priority for us as we think about our fans and our staff and our artists and making sure we've got the right security in place. So, it's been a bigger area of focus. We obviously don't talk a lot about the specifics but certainly it's getting a lot more attention today than it did a year ago. And I think that you'll see various changes to the experience that will hopefully not be dramatic for the fans going to show, but we'll give everybody comfort that we're doing reasonable steps to protect everybody.

And then just to jump on that I always like to remind people that there is a vast majority of shows we promote not in our venues. So, there's difference between when we own the amphitheater or festival and our internal security protocols and how we make sure we have metal detectors and et cetera, versus when we're promoting a show at someone else's venue. We have lots of the -- if you want to call it the security capital risk cost associated with that. So, a majority of the shows, the high percentage of the 25,000 shows are not within our venue network. So, we've two very different kind of strategies, one you can control and one you can't.

But as you sort of go forward, is sort of how good or not good the venues ground security will be a bigger choice for you about whether to play that particular venue if you have got choices in the market kind of thing?

I think we'll have -- venues will continue to elevate. We see lots of them doing a good job, but the good news is that's not our cost to bare and it's just our charge to decide where to put the artist.

And then on the numbers, so very good revenue growth at ticketing, but a bit of margin compression. Was there anything in the quarter either in the mix or anything that you wanted to call out about that?

Well, as in just a mix and timing issue and we called out that we expect flat margins for the full year. So, that -- you can expect then it'll come back over next few quarters.

And we'll now take the question from Brandon Ross with BTIG.

Thank you for taking the questions. A couple of questions. One on margins in general and I guess Ben brought this up in the last question, but with the ticketing and sponsorship top lines growing so-so much this quarter, why aren't you seeing more leverage at each of them even with the couple of subscale ticketing platforms that you purchased? And then secondly, I know you had originally expected all the international ticketing would be on one platform by now. When should we expect that and to catch up to the work you have done in ticketing in the U.S. internationally and is this critical to your scaling into new international markets? Thank you very much.

I'll answer the second first on the backward, on our international ticketing, we actually have the most important market in international the UK and Australia and Canada. They are all -- have always been and are on the close platform, so they are on the business and that's where at the end of the day most of our business is centered and where we want to share and extrapolate all of our cost and product development. When you get to decision like staying, where you're running a separate platform over to the very small piece of your business those urgency to take get on one platform are not on our list right now, they're running local currency. Most of the Europeans are on still retail system where you're buying tickets at the bank or the shopping mall a very retail oriented, not years behind kind of where we're today. So our priority has always has been the big markets like the UK, Canada, Australia to leverage our product development which we have been doing. We've had great growth in the UK over the last few years. And most important what was the priority was to make sure we excel the secondary in the European markets, unlike Ticketmaster in its prior life who waited too long and they have to play catch up. So our biggest priority in international was when we acquired Seatwave and with our GetMe product which integrates secondary and now 9 plus countries where we're now the market leader in the secondary business over there and are very proud of that. So our strategy is in the big markets internationally. They are sharing product innovation and underlying to our current strategy around primary and secondary. The slower markets overtime will look to integrate them into global platform, but those will be minimal upside from a cost advantage in the near term.

What about new markets? Sorry to cut you off, Joe. What about moving into new markets? What is the strategy for that and does any of the re-platforming work that you have to do internationally play a role in that?

I mean international is like concert business. You only -- right now international is always going to be one or two people that are already the leaders. So you may acquire somebody not because you're so much interested in their platform, but you just acquiring the cost of the contracts and the customers. So historically when we have looked into extension, we may acquire a company just if that's the quickest way to get scale and ticket inventory. We can rollout -- our current platform, we can rollout into a new market today. We don’t typically tough right now look at a new market and enter with our new platform if we don't have tickets scale behind it. So, our short term strategy in international when we took over and continued to be -- Ticketmaster was in, I think when we took over ’14-’15 markets. Our goal was to get into the European markets where we had scale and start matching up concerts, inventory with Ticketmaster platform and then step two grow market share in those markets and that's where we've been and that's where we'll see the fruit kind of bear from the tree for the next few years on growing our market share in Spain and Italy and France and Germany, where we have already got content versus obsessing whether we're in a new market or not right now.

Great and then on the margins?

So, first off, just as a reminder as we've talked in the past, our number one obsession is driving the cash generation of the business and delving [ph] how much we're generating for our shareholders. We obviously pay attention to margins and focus on return on capital, but number one is the cash generation for the machine we have. So, I think the two business is on the sponsorship side again strong double-digit growth this year against 25% growth in Q2 last year. So comping on a very difficult comp. A couple of things, we drove a good chunk of that growth. One was an expansion of branded content creation by that division. So, we are working with brands, sponsors and a good chunk of what we're doing is creating content that is their brand integrated into it. That is a lower margin sponsorship product. Still very profitable for us but lower margin. Another piece of activity that we have in Q2 that we've been building over the course of the past year is with our festivals in addition to our payment for sponsorship is not providing activation onsite for additional payment from our sponsors. Again this is a lower margin activity because we've got the feet on the street that are doing the activation, but remains very profitable for us. So, that took a couple of points off the sponsorship business. Again stay mid to high 60s margin business for the growing cash generation. On the ticketing side first of all as I said to Ben part of it is timing, and the other part of it is we have discussed before is that while the traditional was host, now Jetsam [ph] chunk of our business is improved, economics, improve margin, there are a number of other specialty verticals that we've been in that tend for various reasons to have a lower margin profile as those grow faster than the traditional business that just has a counter balance for the margins that we've seen improved with Jetsam. All of which has led to substantial cash improvement at Ticketmaster, but doesn't come through in the margin specifically.

That concludes today's question-and-answer session and this concludes today's call. Thank you for your participation. You may now disconnect.