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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________________________________________

FORM 10-Q

__________________________________________________________________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number: 001-38658

_______________________________________________________________________________

EVENTBRITE, INC.

(Exact name of registrant as specified in its charter)

________________________________________________________________________________

Delaware	14-1888467
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
155 5th Street, 7th Floor San Francisco, CA 94103 (Address of principal executive offices) (Zip Code) (415) 692-7779 (Registrant's telephone number, including area code) Not applicable (Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Class A common stock, $0.00001 par value	EB	New York Stock Exchange LLC

_________________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of July 15, 2020, 67,466,394 shares of Registrant's Class A common stock and 23,383,917 shares of Registrant's Class B common stock were outstanding.

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EVENTBRITE, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD ENDED

JUNE 30, 2020

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		Page
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS		1
PART I. FINANCIAL INFORMATION
Item 1.	Unaudited Interim Condensed Consolidated Financial Statements	4
	Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019	5
	Condensed Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 2020 and 2019	6
	Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30, 2020 and 2019	7
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019	9
	Notes to Unaudited Interim Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54
Item 4.	Controls and Procedures	54
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	55
Item 1A.	Risk Factors	57
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	90
Item 6.	Exhibits	91
Signatures		93

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), that involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "appears," "shall," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential," or "continue," or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements related to the impacts of the COVID-19 global health pandemic, including its impact on us, our operations, or our future financial or operational results; our expectations regarding restructuring charges with respect to the workforce reduction implemented in response to the COVID-19 global health pandemic; statements regarding our credit agreement and our convertible senior notes, including the intended use of the net proceeds; statements about our future financial performance, including our revenue, costs of revenue and operating expenses; our anticipated growth and growth strategies and our ability to effectively manage that growth; our ability to achieve and grow profitability; the sufficiency of our cash, cash equivalents and investments to meet our liquidity needs; our ability to maintain the security and availability of our platform; our predictions about industry and market trends; our ability to attract and retain creators; our ability to successfully operate internationally; our ability to maintain, protect and enhance our intellectual property; our ability to attract and retain qualified employees and key personnel; our ability to comply with modified or new laws and regulations applying to our business; and our ability to successfully defend litigation brought against us.

The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties and other factors, including those described in the section titled "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q. We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q. You should not rely upon forward-looking statements as predictions of future events.

All forward-looking statements are based on information and estimates available to the Company at the time of this Quarterly Report on Form 10-Q and are not guarantees of future performance. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law.

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PART 1. FINANCIAL INFORMATION

Item 1. Unaudited Interim Condensed Consolidated Financial Statements

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EVENTBRITE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

	June 30, 2020		December 31, 2019
Assets
Current assets
Cash and cash equivalents	$	546,863	$	420,712
Funds receivable	5,659		54,896
Accounts receivable, net	829		2,932
Creator signing fees, net	1,511		9,597
Creator advances, net	10,532		22,282
Prepaid expenses and other current assets	11,702		14,157
Total current assets	577,096		524,576
Property, plant and equipment, net	15,083		19,735
Operating lease right-of-use assets	18,342		22,160
Goodwill	170,560		170,560
Acquired intangible assets, net	43,948		49,158
Restricted cash	2,230		2,228
Creator signing fees, noncurrent	15,239		16,710
Creator advances, noncurrent	886		922
Other assets	12,291		1,966
Total assets	$	855,675	$	808,015
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable, creators	$	203,222	$	307,871
Accounts payable, trade	4,144		1,870
Chargebacks and refunds reserve	65,907		2,699
Accrued compensation and benefits	7,068		6,347
Accrued taxes	1,489		5,409
Operating lease liabilities	7,538		9,115
Other accrued liabilities	13,110		16,997
Total current liabilities	302,478		350,308
Accrued taxes, noncurrent	14,444		15,173
Operating lease liabilities, noncurrent	12,998		16,162
Long-term debt	196,581		—
Other liabilities	155		557
Total liabilities	526,656		382,200
Commitments and contingencies (Note 11)
Stockholders’ equity
Preferred stock, $0.00001 par value; 100,000,000 shares authorized, no shares issued or outstanding as of June 30, 2020 and December 31, 2019	—		—
Common stock, $0.00001 par value; 1,100,000,000 shares authorized; 90,811,061 shares issued and outstanding as of June 30, 2020; 85,718,860 shares issued and outstanding as of December 31, 2019	1		1
Additional paid-in capital	886,904		798,640
Accumulated deficit	(557,886)		(372,826)
Total stockholders’ equity	329,019		425,815
Total liabilities and stockholders’ equity	$	855,675	$	808,015

(See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements)

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EVENTBRITE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Net revenue	$	8,394	$	80,758	$	57,480	$	162,084
Cost of net revenue(1)	10,094		31,119		38,099		61,684
Gross profit	(1,700)		49,639		19,381		100,400
Operating expenses(1)
Product development	15,047		16,628		31,218		31,225
Sales, marketing and support	(3,073)		26,053		96,842		47,778
General and administrative	22,472		22,287		64,581		47,667
Total operating expenses	34,446		64,968		192,641		126,670
Loss from operations	(36,146)		(15,329)		(173,260)		(26,270)
Interest expense	(3,625)		(1,033)		(3,637)		(2,125)
Other income (expense), net	1,186		375		(8,099)		2,555
Loss before income taxes	(38,585)		(15,987)		(184,996)		(25,840)
Income tax provision (benefit)	(1)		(1,193)		64		(1,093)
Net loss	$	(38,584)	$	(14,794)	$	(185,060)	$	(24,747)
Net loss per share, basic and diluted	$	(0.44)	$	(0.18)	$	(2.12)	$	(0.31)
Weighted-average number of shares outstanding used to compute net loss per share, basic and diluted	88,410		81,369		87,174		80,049
(1) Includes stock-based compensation as follows (in thousands):
	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Cost of net revenue	$	207	$	325	$	630	$	569
Product development	3,366		2,187		7,055		4,225
Sales, marketing and support	901		1,246		2,332		2,469
General and administrative	5,137		4,948		10,416		9,570

(See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements)

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EVENTBRITE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands, except share data)

(Unaudited)

	Common Stock-Class A			Common Stock-Class B			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance at January 1, 2020	61,863,617	$	1	23,855,243	$	—	$	798,640	$	(372,826)	$	425,815
Issuance of common stock upon exercise of stock options	738,410	—		—	—		4,654		—		4,654
Issuance of restricted stock awards	480	—		—	—		—		—		—
Issuance of common stock for settlement of RSUs	304,600	—		—	—		—		—		—
Shares withheld related to net share settlement	(110,411)	—		—	—		(1,713)		—		(1,713)
Conversion of common stock from Class B to Class A	262,483	—		(262,483)	—		—		—		—
Vesting of early exercised stock options	—	—		—	—		61		—		61
Stock-based compensation	—	—		—	—		11,201		—		11,201
Net loss	—	—		—	—		—		(146,476)		(146,476)
Balance at March 31, 2020	63,059,179	1		23,592,760	$	—	812,843		(519,302)		293,542
Issuance of common stock upon exercise of stock options	1,290,333	—		13,004	—		6,837		—		6,837
Issuance of restricted stock awards	—	—		—	—		—		—		—
Issuance of common stock for settlement of RSUs	228,233	—		—	—		—		—		—
Shares withheld related to net share settlement	(70,098)	—		—	—		(616)		—		(616)
Conversion of common stock from Class B to Class A	221,847	—		(221,847)	—		—		—		—
Vesting of early exercised stock options	—	—		—	—		180		—		180
Equity component of convertible notes, net of issuance costs	—	—		—	—		45,452		—		45,452
Purchase of convertible senior notes capped calls	—	—		—	—		(15,600)		—		(15,600)
Issuance of common stock for ESPP Purchase	98,476	—		—	—		721		—		721
Shares issued in connection with term loans stock purchase agreement	2,599,174	—		—	—		27,369		—		27,369
Stock-based compensation	—	—		—	—		9,718		—		9,718
Net loss	—	—		—	—		—		(38,584)		(38,584)
Balance at June 30, 2020	67,427,144	$	1	23,383,917	$	—	$	886,904	$	(557,886)	$	329,019

(See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements)

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EVENTBRITE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands, except share data)

(Unaudited)

	Common Stock-Class A			Common Stock-Class B			Treasury Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount		Shares	Amount
Balance at January 1, 2019	11,502,993	$	—	66,855,401	$	—	(188,480)	$	(488)	$	718,405	$	(302,695)	$	415,222
Issuance of common stock upon exercise of stock options	1,785,106	—		249,207	—		—	—		12,427		—		12,427
Issuance of restricted stock awards	4,402	—		—	—		—	—		—		—		—
Issuance of common stock for settlement of RSUs	62,263	—		—	—		—	—		—		—		—
Shares withheld related to net share settlement	(24,249)	—		—	—		—	—		(560)		—		(560)
Conversion of common stock from Class B to Class A	21,095,075	—		(21,095,075)	—		—	—		—		—		—
Retirement of treasury shares	—	—		—	—		188,480	488		(488)		—		—
Vesting of early exercised stock options	—	—		—	—		—	—		92		—		92
Stock-based compensation	—	—		—	—		—	—		8,330		—		8,330
Cumulative effect adjustment upon adoption of ASU 2014-09	—	—		—	—		—	—		—		(600)		(600)
Cumulative effect adjustment upon adoption of ASU 2016-02	—	—		—	—		—	—		—		(771)		(771)
Net loss	—	—		—	—		—	—		—		(9,953)		(9,953)
Balance at March 31, 2019	34,425,590	—		46,009,533	—		—	—		738,206		(314,019)		424,187
Issuance of common stock upon exercise of stock options	1,785,361	—		—	—		—	—		10,526		—		10,526
Issuance of restricted stock awards	21,016	—		—	—		—	—		—		—		—
Issuance of common stock for settlement of RSUs	52,204	—		—	—		—	—		—		—		—
Issuance of common stock for ESPP Purchase	167,706	—		—	—		—	—		2,234		—		2,234
Shares withheld related to net share settlement	(11,858)	—		—	—		—	—		(253)		—		(253)
Conversion of common stock from Class B to Class A	11,491,455	—		(11,491,455)	—		—	—		—		—		—
Vesting of early exercised stock options	—	—		—	—		—	—		92		—		92
Stock-based compensation	—	—		—	—		—	—		9,154		—		9,154
Net loss	—	—		—	—		—	—		—		(14,794)		(14,794)
Balance at June 30, 2019	47,931,474	$	—	34,518,078	$	—	—	$	—	$	759,959	$	(328,813)	$	431,146

(See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements)

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EVENTBRITE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
	Six Months Ended June 30,
	2020		2019
Cash flows from operating activities
Net loss	$	(185,060)	$	(24,747)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	11,909		11,969
Amortization of creator signing fees	5,301		4,915
Noncash operating lease expense	3,894		3,933
Accretion of debt discounts and issuance costs	2,688		223
Stock-based compensation	20,433		16,833
Provision for chargebacks and refunds	84,533		9,951
Impairment charges	8,227		1,899
Provision for bad debt and creator advances	16,224		2,380
Loss on disposal of assets	2,159		58
Deferred income taxes	(82)		(745)
Changes in operating assets and liabilities:
Accounts receivable	(1,001)		(1,061)
Funds receivable	49,237		12,115
Creator signing fees, net	(3,901)		(9,251)
Creator advances, net	(913)		(8,513)
Prepaid expenses and other current assets	1,964		1,783
Other assets	259		(2)
Accounts payable, creators	(104,649)		50,769
Accounts payable, trade	1,440		956
Chargebacks and refunds reserve	(21,325)		(9,590)
Accrued compensation and benefits	721		(308)
Accrued taxes	(3,920)		(3,525)
Operating lease liabilities	(4,876)		(4,105)
Other accrued liabilities	(9,338)		3,702
Accrued taxes, noncurrent	(647)		(1,334)
Other liabilities	8		(974)
Net cash provided by (used in) operating activities	(126,715)		57,331
Cash flows from investing activities
Purchases of property and equipment	(1,230)		(3,566)
Capitalized internal-use software development costs	(2,538)		(4,271)
Net cash used in investing activities	(3,768)		(7,837)

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EVENTBRITE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
	Six Months Ended June 30,
	2020		2019
Cash flows from financing activities
Proceeds from issuance of common stock under ESPP	721		2,234
Proceeds from exercise of stock options	11,491		22,954
Taxes paid related to net share settlement of equity awards	(453)		(706)
Principal payments on debt obligations	—		(11,406)
Proceeds from issuance of debt and common stock, net of issuance costs paid	260,777		(457)
Purchase of convertible notes capped calls	(15,600)		—
Payments on finance lease obligations	(300)		(138)
Payments of deferred offering costs	—		(413)
Net cash provided by financing activities	256,636		12,068
Net increase in cash, cash equivalents and restricted cash	126,153		61,562
Cash, cash equivalents and restricted cash
Beginning of period	422,940		439,400
End of period	$	549,093	$	500,962
Supplemental cash flow data
Interest paid	$	613	$	1,876
Income taxes paid, net of refunds	475		367
Noncash investing and financing activities
Vesting of early exercised stock options	$	241	$	184
Purchases of property and equipment, accrued but unpaid	226		338

(See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements)

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EVENTBRITE, INC.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

1. Overview and Basis of Presentation

Description of Business

Eventbrite, Inc. (Eventbrite or the Company) has built a powerful, broad technology platform to enable creators to solve the challenges associated with creating live and online experiences. The Company’s platform integrates components needed to seamlessly plan, promote and produce live events, thereby allowing creators to reduce friction and costs, increase reach and drive ticket sales.

Basis of Presentation

The accompanying i