How Much Is Eventbrite Worth?
Self-service event management and online ticketing company Eventbrite recently went public, and its stock price surged by nearly 70% on its first day of trading. The company’s current stock price of around $35 gives it a valuation of $2.6 billion, substantially higher than its IPO valuation of under $2 billion. The online ticketing industry is pegged to reach $68 billion by 2025 – at a CAGR (compounded annual growth rate) of nearly 5% – and with its global presence, Eventbrite is well-poised to capitalize on this growth. The company has grown its revenues by more than 50% in the last two years, and if the company is able to sustain this strong growth, its valuation could have further upside.
Eventbrite generates revenues by charging its customers – event creators/event managers looking to publicize their events and sell tickets – a fee on each paid ticket sold. Eventbrite provides a technology platform to its customers to manage events, publicize them online, sell tickets and collect payments online. The company’s customers regularly use its platform for their events, and its customer retention rate in 2017 was 97%. Recently, the company opened a storefront in the Etelos Marketplace, making its event management tools more broadly available.
Our interactive dashboard on Estimating Eventbrite’s Valuation analyzes Eventbrite’s key revenue and valuation drivers. We also compare Eventbrite’s valuation multiple with comparable companies to arrive at a benchmark.
In the last two years, Eventbrite has grown its revenues at a rapid pace, while maintaining its gross margin number and reducing operating expenses as a % of revenue. The revenues of Live Nation’s ticketing segment (which competes with Eventbrite) are growing at a slower pace, though they are almost 8x those of Eventbrite.
Eventbrite has witnessed significant growth in total tickets sold on its platform, and the ratio of paid tickets to total tickets is now at 35%. The company earns around $3 per paid ticket sold on its platform, and this is a key revenue driver for Eventbrite.
While Eventbrite’s paid ticket sales in 2017 were around 35% of the figure sold by Live Nation, its revenues were only 2% of those of Live Nation’s ticketing segment. This indicates Eventbrite’s revenues per ticket sold are much lower than Live Nation – which makes sense given that Live Nation handles bigger clients with higher ticket values.
Sustained revenue growth and margin expansion are key to any upside to Eventbrite’s valuation. The company’s current revenue multiple is lower than that commanded by several other SaaS players – some of them with lower revenue growth. Most players are not yet profitable – with the exception of Appfolio, which had positive net income in 2018.
Based on its current valuation of around $2.8 billion, Eventbrite’s P/S multiple is 8.5x, lower than that of Appfolio and Shopify which command a multiple in the range of 15X-17X. Survey Monkey, with much lower revenue growth commands a P/S multiple of 10X. This is likely due to a number of factors, one being that Eventbrite’s profitability is lower than most of the other players. Further, its ultimate market opportunity may be viewed as smaller than the other players given its relatively narrow focus and Live Nation’s strong market position.
Below are the key drivers of Eventbrite’s valuation:
- 5% of Eventbrite’s customers contribute nearly half of its revenues – indicating strong dependence on key customers for revenue growth. The company has a retention rate of more than 95%, however it needs to acquire more large clients to grow revenues. With a possibility of sustained strong revenue growth in future, the company will be able to command a higher P/S multiple
- The company has been able to reduce costs over the last few years, and in 2017 95% of its customers were acquired without any marketing costs. While it is still incurring losses, lower operating costs and higher volumes will lead to a quicker path to profitability, leading to a higher valuation.
- Eventbrite faces strong competition from players such as Stubhub (a part of eBay) and Live Nation. The company’s ability to build a competitive edge is likely to drive its valuation.
- Eventbrite had a data leak incident in June this year. If the company loses trust of its customers, it would impact revenue growth significantly. A secure platform is key to driving growth for the company.
With strong revenue growth and a higher P/S multiple of around 10X – Eventbrite can command a valuation of around $3.5 billion. You can create this scenario in our interactive dashboard here.
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