SFX third quarter report: Attendances up, losses increase
The US-based global EDM empire SFX Entertainment – which has included Australia’s Stereosonic since October 2013 – posted a 2015 third quarter rise of 24.8% in attendances.
In the period to September 30, a total of 1.95 million people went to the 286 festivals and other live events SFX produced, promoted, licensed or managed.
Many of these are well-established brands with strong followings. During the quarter, the 7th Electric Zoo in New York drew 75,000 and a record number of sponsors. The 4th Summer Set in Wisconsin had 50,000 and TomorrowWorld in Georgia had 150,000. Three signature events in Europe – Dominator in the Netherlands, Q-BASE in Germany and X-Qlusive Holland XXL –sold out.
Live events make up 86.3% of the company’s revenue.
But SFX earnings fell 7% to US$133.2 million, a drop of $10 million. It was less than analyst expectations of $190.50 million. Operating loss doubled to $41.5 million. Net loss was $54.5 million compared to a $4.9 million gain in the prior-year quarter.
About $4 million of the $10 million loss was due to cancelled or partly cancelled events, SFX Chairman and CEO Robert Sillerman said. Some of this will be covered by insurance. TomorrowWorld, for instance, abandoned its last day due to bad weather. One Tribe in late September was axed due to poor ticket sales.
Described by Sillerman as “challenging”, the third quarter saw the company also hit by the impact of foreign exchange, and a revenue drop from its pro-DJ store and download service Beatport.
Sillerman admitted that sponsorships “did not meet our expectations, which we consider primarily a timing issue.” He said many sponsors intended to “renew, and in some cases expand, their partnerships, and we are confident in our potential to secure additional sponsorships. “
He added, “While our financial performance was impacted by external factors, we are making several significant changes this quarter to address the lower than anticipated operating results. Additionally, although fourth quarter results are expected to benefit from insurance settlements and the finalization of a new marketing agreement, the 2015 full year financial results will not meet our prior expectations. Going forward, and notwithstanding the ongoing sales process, our teams remain focused on operations.”
For the first nine months of 2015, SFX’s revenue grew 18.6% to $306.5 million. Net loss increased to $144 million from $86.4 million. Event attendance during this period increased 34.8% to 4.08 million. SFX has a market capitalisation of $92 million after its share price dropped 81%. It has undergone cashflow issues and management changes. Silverman is trying to make the company private. A first attempt to secure financing failed. Currently, there’s a second attempt, with a preliminary bid from Sillerman and interest from other, unspecified parties.
SFX brands continue to grow worldwide. Sensation, already held in 32 countries, debuted in Tokyo last month to a sell-out crowd of 21,000 and makes its first appearance in Hyderabad, India in February.
Also in October, SFX brands were high profile during the week-long Amsterdam Dance Event conference. These included the techno Awakenings, which sold out its four shows, and the high profile Amsterdam Music Festival which expanded to two-days and drew a total of 70,000.
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