Company Quick10K Filing
Eventbrite
Price17.09 EPS-1
Shares84 P/E-26
MCap1,442 P/FCF14
Net Debt-487 EBIT-49
TEV955 TEV/EBIT-20
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-09-30 Filed 2020-11-05
10-Q 2020-06-30 Filed 2020-08-10
S-1 2020-06-18 Public Filing
10-Q 2020-03-31 Filed 2020-05-11
10-K 2019-12-31 Filed 2020-03-02
10-Q 2019-09-30 Filed 2019-11-07
10-Q 2019-06-30 Filed 2019-08-07
10-Q 2019-03-31 Filed 2019-05-01
10-K 2018-12-31 Filed 2019-03-07
S-1 2018-08-23 Public Filing
8-K 2020-12-16 Officers, Exhibits
8-K 2020-11-30 Officers, Exhibits
8-K 2020-11-05
8-K 2020-09-16
8-K 2020-09-10
8-K 2020-08-18
8-K 2020-08-06
8-K 2020-06-10
8-K 2020-06-03
8-K 2020-05-21
8-K 2020-05-19
8-K 2020-05-11
8-K 2020-05-09
8-K 2020-04-08
8-K 2020-03-16
8-K 2020-02-27
8-K 2020-01-14
8-K 2019-11-07
8-K 2019-09-19
8-K 2019-08-08
8-K 2019-08-07
8-K 2019-08-01
8-K 2019-06-07
8-K 2019-05-28
8-K 2019-05-01
8-K 2019-03-07
8-K 2019-01-18

EB 10Q Quarterly Report

Part 1. Financial Information
Item 1. Unaudited Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-10.1 lorrienorrington-consu.htm
EX-31.1 ex311certificationofce.htm
EX-31.2 ex312certificationofcf.htm
EX-32.1 ex321certificationofce.htm

Eventbrite Earnings 2020-09-30

Balance SheetIncome StatementCash Flow
1.00.80.60.40.20.02016201720182020
Assets, Equity
0.10.10.0-0.0-0.1-0.12016201720182020
Rev, G Profit, Net Income
0.30.20.10.1-0.0-0.12016201720182020
Ops, Inv, Fin

eb-20200930
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Table of Contents
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 September 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)
________________________________________________________________________________
Delaware14-1888467
(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 classTrading symbol(s)Name of each exchange on which registered
Class A common stock, $0.00001 par valueEBNew 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.   
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 October 15, 2020, 68,281,695 shares of Registrant's Class A common stock and 23,364,129 shares of Registrant's Class B common stock were outstanding.
1

Table of Contents
EVENTBRITE, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED
SEPTEMBER 30, 2020
TABLE OF CONTENTS


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

2

Table of Contents
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.




Table of Contents
PART 1. FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

4

Table of Contents
EVENTBRITE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share amounts)
(Unaudited)

September 30,
2020
December 31,
2019
Assets
Current assets
          Cash and cash equivalents$543,296 $420,712 
          Funds receivable9,616 54,896 
          Accounts receivable, net736 2,932 
          Creator signing fees, net5,105 9,597 
          Creator advances, net8,456 22,282 
          Prepaid expenses and other current assets11,957 14,157 
                    Total current assets579,166 524,576 
Restricted cash2,632 2,228 
Creator signing fees, noncurrent8,669 16,710 
Creator advances, noncurrent886 922 
Property, plant and equipment, net13,536 19,735 
Operating lease right-of-use assets18,076 22,160 
Goodwill170,560 170,560 
Acquired intangible assets, net41,332 49,158 
Other assets9,969 1,966 
                    Total assets$844,826 $808,015 
Liabilities and Stockholders’ Equity
Current liabilities
          Accounts payable, creators$217,762 $307,871 
          Accounts payable, trade1,414 1,870 
Chargebacks and refunds reserve49,588 2,699 
          Accrued compensation and benefits5,961 6,347 
          Accrued taxes2,199 5,409 
          Operating lease liabilities6,245 9,115 
          Other accrued liabilities10,300 16,997 
                    Total current liabilities293,469 350,308 
Accrued taxes, noncurrent14,439 15,173 
Operating lease liabilities, noncurrent13,667 16,162 
Long-term debt201,531  
Other liabilities103 557 
                    Total liabilities523,209 382,200 
Commitments and contingencies (Note 10)
Stockholders’ equity
Preferred stock, $0.00001 par value; 100,000,000 shares authorized, no shares issued or outstanding as of September 30, 2020 and December 31, 2019
  
Common stock, $0.00001 par value; 1,100,000,000 shares authorized; 91,618,627 shares issued and outstanding as of September 30, 2020; 85,718,860 shares issued and outstanding as of December 31, 2019
1 1 
Additional paid-in capital898,929 798,640 
Accumulated deficit(577,313)(372,826)
                    Total stockholders’ equity321,617 425,815 
                    Total liabilities and stockholders’ equity$844,826 $808,015 
(See accompanying Notes to Unaudited 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 September 30,Nine Months Ended September 30,
2020201920202019
Net revenue$21,868 $82,052 $79,348 $244,136 
Cost of net revenue11,231 33,389 49,330 95,073 
                    Gross profit10,637 48,663 30,018 149,063 
Operating expenses
          Product development 11,540 16,211 42,758 47,436 
          Sales, marketing and support(5,011)28,764 91,831 76,542 
          General and administrative15,845 27,390 80,426 75,057 
                    Total operating expenses22,374 72,365 215,015 199,035 
                    Loss from operations(11,737)(23,702)(184,997)(49,972)
Interest expense(10,284)(853)(13,921)(2,978)
Loss on debt extinguishment (1,742) (1,742)
Other income (expense), net2,837 (3,700)(5,262)(1,145)
                    Loss before income taxes(19,184)(29,997)(204,180)(55,837)
Income tax provision (benefit)243 147 307 (946)
Net loss$(19,427)$(30,144)$(204,487)$(54,891)
Net loss per share, basic and diluted$(0.21)$(0.36)$(2.31)$(0.68)
Weighted-average number of shares outstanding used to compute net loss per share, basic and diluted90,973 83,063 88,441 81,094 

(See accompanying Notes to Unaudited 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 ACommon Stock-Class BAdditional
Paid-In
Capital
Accumulated
Deficit
Total Stockholders’ Equity
SharesAmountSharesAmount
Balance at December 31, 201961,863,617 $1 23,855,243 $ $798,640 $(372,826)$425,815 
Issuance of common stock upon exercise of stock options738,410 —  — 4,654 — 4,654 
Issuance of restricted stock awards480 — — — — —  
Issuance of common stock for settlement of RSUs304,600 — — — — —  
Shares withheld related to net share settlement(110,411)— — — (1,713)— (1,713)
Conversion of common stock from Class B to Class A262,483 — (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, 202063,059,179 1 23,592,760  812,843 (519,302)293,542 
Issuance of common stock upon exercise of stock options1,290,333 — 13,004 — 6,837 — 6,837 
Issuance of common stock for settlement of RSUs228,233 — — — — —  
Shares withheld related to net share settlement(70,098)— — — (616)— (616)
Conversion of common stock from Class B to Class A221,847 — (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 Purchase98,476 — — — 721 — 721 
Shares issued in connection with term loans stock purchase agreement2,599,174 — — — 27,369 — 27,369 
Stock-based compensation— — — — 9,718 — 9,718 
Net loss— — — — — (38,584)(38,584)
Balance at June 30, 202067,427,144 1 23,383,917  886,904 (557,886)329,019 
Issuance of common stock upon exercise of stock options536,240 —  — 2,624 — 2,624 
Issuance of restricted stock awards17,638 — — — — —  
Issuance of common stock for settlement of RSUs392,720 — — — — —  
Shares withheld related to net share settlement(139,032)— — — (1,218)— (1,218)
Conversion of common stock from Class B to Class A13,620 — (13,620)— — —  
Stock-based compensation— — — — 10,619 — 10,619 
Net loss— — — — — (19,427)(19,427)
Balance at September 30, 202068,248,330 $1 23,370,297 $ $898,929 $(577,313)$321,617 

(See accompanying Notes to Unaudited 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 ACommon Stock-Class BTreasury StockAdditional
Paid-In
Capital
Accumulated
Deficit
Total Stockholders’ Equity
SharesAmountSharesAmountSharesAmount
Balance at December 31, 201811,502,993 $ 66,855,401 $ (188,480)$(488)$718,405 $(302,695)$415,222 
Issuance of common stock upon exercise of stock options1,785,106 — 249,207 — — — 12,427 — 12,427 
Issuance of restricted stock awards4,402 — — — — — — —  
Issuance of common stock for settlement of RSUs62,263 — — — — — — —  
Shares withheld related to net share settlement(24,249)— — — — — (560)— (560)
Conversion of common stock from Class B to Class A21,095,075 — (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, 201934,425,590  46,009,533    738,206 (314,019)424,187 
Issuance of common stock upon exercise of stock options1,785,361 —  — — — 10,526 — 10,526 
Issuance of restricted stock awards21,016 — — — — — — —  
Issuance of common stock for settlement of RSUs52,204 — — — — — — —  
Issuance of common stock for ESPP Purchase167,706 — — — — — 2,234 — 2,234 
Shared withheld related to the net share settlement(11,858)— — — — — (253)— (253)
Conversion of common stock from Class B to Class A11,491,455  (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, 201947,931,474  34,518,078    759,959 (328,813)431,146 
Issuance of common stock upon exercise of stock options1,486,012 — — — — — 9,859 — 9,859 
Issuance of restricted stock awards369,140 — — — — — — —  
Issuance of common stock for settlement of RSUs107,554 — — — — — — —  
Shares withheld related to net share settlement(40,157)— — — — — (704)— (704)
Conversion of common stock from Class B to Class A7,399,542 1 (7,399,542)— — — (1)—  
Vesting of early exercised stock options— — — — — — 92 — 92 
Stock-based compensation— — — — — — 10,276 — 10,276 
Net loss— — — — — — — (30,144)(30,144)
Balance at September 30, 201957,253,565 $1 27,118,536 $  $ $779,481 $(358,957)$420,525 
(See accompanying Notes to Unaudited Condensed Consolidated Financial Statements)
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EVENTBRITE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Nine Months Ended September 30,
20202019
Cash flows from operating activities
Net loss$(204,487)$(54,891)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
          Depreciation and amortization17,272 18,081 
          Amortization of creator signing fees7,260 7,741 
          Noncash operating lease expense5,872 5,969 
          Accretion of debt discounts and issuance costs9,775 326 
          Loss on debt extinguishment 1,742 
          Stock-based compensation30,541 26,769 
Provision for chargebacks and refunds73,168 15,209 
          Impairment charges9,873 2,955 
          Provision for bad debt and creator advances16,743 3,982 
          Loss on disposal of assets2,393 61 
          Deferred income taxes(23)(778)
          Changes in operating assets and liabilities:
                    Accounts receivable(1,989)(1,182)
                    Funds receivable45,280 14,280 
                    Creator signing fees, net(3,943)(16,505)
                    Creator advances, net1,137 (6,690)
                    Prepaid expenses and other current assets1,703 6,262 
                    Other assets444 84 
                    Accounts payable, creators(90,109)94,596 
                    Accounts payable, trade(577)1,068 
                    Chargebacks and refunds reserve(26,279)(14,357)
                    Accrued compensation and benefits(385)(22)
                    Accrued taxes(3,210)(3,350)
                    Operating lease liabilities(7,222)(6,472)
                    Other accrued liabilities(9,821)6,546 
                    Accrued taxes, noncurrent(711)(669)
                    Other liabilities16 (902)
                         Net cash (used in) provided by operating activities(127,279)99,853 
Cash flows from investing activities
Purchases of property and equipment(1,316)(4,959)
Capitalized internal-use software development costs(3,292)(6,416)
                         Net cash used in investing activities(4,608)(11,375)
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EVENTBRITE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Nine Months Ended September 30,
20202019
Cash flows from financing activities
Proceeds from issuance of common stock under ESPP721 2,234 
Proceeds from exercise of stock options14,115 32,814 
Taxes paid related to net share settlement of equity awards(666)(833)
Principal payments on debt obligations (73,594)
Proceeds from issuance of debt and common stock, net of issuance costs paid256,729 (457)
Purchase of convertible notes capped calls(15,600) 
Payments on finance lease obligations(424)(214)
Payments of deferred offering costs (413)
                         Net cash provided by (used in) financing activities254,875 (40,463)
                         Net increase in cash, cash equivalents and restricted cash122,988 48,015 
Cash, cash equivalents and restricted cash
Beginning of period422,940 439,400 
End of period$545,928 $487,415 
Supplemental cash flow data
          Interest paid$1,935 $2,632 
          Income taxes paid, net of refunds619 860 
Noncash investing and financing activities
Vesting of early exercised stock options$241 $276 
Purchases of property and equipment, accrued but unpaid61 167 
Operating lease right-of-use assets obtained in exchange for operating lease liabilities2,273  

(See accompanying Notes to Unaudited Condensed Consolidated Financial Statements)
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EVENTBRITE, INC.
Notes to Unaudited 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 condensed consolidated financial statements of the Company are unaudited. The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and the applicable rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The condensed consolidated balance sheet as of December 31, 2019 included herein was derived from the audited financial statements as of that date.
The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal and recurring nature considered necessary to state fairly the Company's consolidated financial position, results of operations and cash flows for the interim periods. All intercompany transactions and balances have been eliminated. The interim results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 or for any other future annual or interim period.
The information included in this Quarterly Report on Form 10-Q should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Quantitative and Qualitative Disclosures About Market Risk" and the Consolidated Financial Statements and notes thereto included in Items 7, 7A and 8, respectively, in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 (2019 Form 10-K).
The Company adopted ASC 842 in the 2019 Form 10-K and retroactively applied its provisions to January 1, 2019 in accordance with ASU No. 2018-11, Targeted Improvements to ASC 842 using a modified retrospective approach, thereby recasting the results of operations for each of the first three quarters of 2019. The recast results for the three and nine months ended September 30, 2019 are reflected as such in this Quarterly Report on Form 10-Q. For further information, see Note 7.
Use of Estimates
In order to conform with U.S. GAAP, the Company is required to make certain estimates, judgments and assumptions when preparing its consolidated financial statements. These estimates, judgments and assumptions affect the reported assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reported periods. These estimates include, but are not limited to, the recoverability of creator signing fees and creator advances, the chargebacks and refunds reserve, the capitalization and estimated useful life of internal-use software, certain assumptions used in the valuation of equity awards, assumptions used in determining the fair value of business combinations, the allowance for doubtful accounts, indirect tax reserves and contra-revenue amounts related to fraudulent events, customer disputed transactions and refunds. The Company evaluates these estimates on an ongoing basis. Actual results could differ from those estimates and such differences could be material to the Company’s consolidated financial statements.
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COVID-19 Impacts
During the nine months ended September 30, 2020, a global health pandemic referred to as COVID-19 arose and has disrupted many industries around the world, including the live events industry, resulting in the cancellation or postponement of live events. The effect of and uncertainties surrounding the COVID-19 pandemic has caused the Company to make significant estimates in its unaudited condensed consolidated financial statements as of and for the three and nine months ended September 30, 2020, specifically related to chargebacks and refunds due to cancelled or postponed events, which impacts net revenue, advance payouts, creator signing fees and creator advances. The COVID-19 pandemic is ongoing in nature and the Company will continue to revise such estimates in future reporting periods to reflect management's best estimates of future outcomes. The COVID-19 pandemic has adversely affected the Company’s results of operations in the three and nine months ended September 30, 2020. Significant uncertainty remains regarding the extent and duration of the impact that the COVID-19 pandemic will have on the Company’s business. The full extent to which COVID-19 impacts the Company’s business, results of operations and financial condition cannot be predicted at this time, and the impact of COVID-19 may persist for an extended period of time or become more pronounced.
2020 Restructuring
In April 2020, the Company's board of directors approved a program to reduce the Company's global workforce personnel by approximately 45% (the RIF). This resulted in total restructuring costs of $9.5 million associated with the RIF which was substantially completed in the second quarter of 2020. Remaining restructuring costs during the three months ended September 30, 2020 were immaterial.
Comprehensive Loss
For all periods presented, comprehensive loss equaled net loss. Therefore, the condensed consolidated statements of comprehensive loss have been omitted from the unaudited condensed consolidated financial statements.
Segment Information
The Company’s Chief Executive Officer (CEO) is the chief operating decision maker. The Company's CEO reviews discrete financial information presented on a consolidated basis for purposes of allocating resources and evaluating the Company’s financial performance. Accordingly, the Company has determined that it operates as a single operating segment and has one reporting unit.
2. Significant Accounting Policies
Recently Adopted Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board (FASB) issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes (ASU 2019-12). This standard simplifies accounting for income taxes by removing certain exceptions to the general principles and amending existing guidance to improve consistent application. The Company adopted this new standard effective January 1, 2020. Its adoption had no material impact on the Company's financial reporting or results of operations.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13). The amendments modify the disclosure requirements in Topic 820 to add disclosures regarding changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty. Certain disclosure requirements in Topic 820 are also removed or modified. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company adopted this new standard effective January 1, 2020. Its adoption had no material impact on the Company's financial reporting or results of operations.
In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04), which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. The Company adopted this new standard effective January 1, 2020. Its adoption had no material impact on the Company's financial reporting or results of operations.
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In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost, including trade receivables. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model that requires the use of forward-looking information to calculate credit loss estimates. The Company adopted this new standard effective January 1, 2020 and has considered forward-looking information in its measurement and recognition of expected credit losses for its accounts receivables, creator signing fees and creator advances, including consideration of the financial statement effects of the COVID-19 pandemic. Refer to Note 3, Note 4 and Note 5 for further information.
Recently Issued Accounting Pronouncements Not Yet Adopted
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Topic 470) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Topic 815), which eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted earnings per share computation. The amendments in this update are effective for fiscal years beginning after December 15, 2021. Early adoption is permitted, but no earlier than annual periods beginning after December 15, 2020. The Company is evaluating the accounting, transition and disclosure requirements of this standard.
Significant Accounting Policies
The Company's significant accounting policies are discussed in the "Notes to Consolidated Financial Statements, Note 2. Significant Accounting Policies" in the 2019 Form 10-K. There have been no significant changes to these policies that have had a material impact on the Company's unaudited condensed consolidated financial statements and related notes, except as noted below.
Revenue Recognition
The Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs—Contracts with Customers (Subtopic 340-40) (ASC 606) on January 1, 2019.
The Company determines revenue recognition through the following steps:
i.Identification of the contract, or contracts, with a customer
ii.Identification of the performance obligations in the contract
iii.Determination of the transaction price
iv.Allocation of the transaction price to the performance obligations in the contract
v.Recognition of revenue, when, or as, the Company satisfies the performance obligation
The Company derives its revenues primarily from service fees and payment processing fees charged at the time a ticket for an event is sold. The Company also derives revenues from providing certain creators with account management services and customer support. The Company's customers are event creators who use the Company's platform to sell tickets to attendees. Revenue is recognized when or as control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company allocates the transaction price by estimating a standalone selling price for each performance obligation using an expected cost plus a margin approach. For service fees and payment processing fees, revenue is recognized when the ticket is sold. For account management services and customer support, revenue is recognized over the period from the date of the sale of the ticket to the date of the event.
The event creator has the choice of whether to use Eventbrite Payment Processing (EPP) or to use a third-party payment processor, referred to as Facilitated Payment Processing (FPP). Under the EPP option, the Company is the merchant of record and is responsible for processing the transaction and collecting the face value of the ticket and all associated fees at the time the ticket is sold. The Company is also responsible for remitting these amounts collected, less the Company's fees, to the event creator. Under the FPP option, Eventbrite is not responsible for processing the transaction or collecting the face value of the ticket and associated fees. In this case, the Company invoices the creator for all of the Company's fees.
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The Company evaluates whether it is appropriate to recognize revenue on a gross or net basis based upon its evaluation of whether the Company obtains control of the specified goods or services by considering if it is primarily responsible for fulfillment of the promise, has inventory risk, and has the latitude in establishing pricing and selecting suppliers, among other factors. The Company determined the event creator is the party responsible for fulfilling the promise to the attendee, as the creator is responsible for providing the event for which a ticket is sold, is responsible for determining the price of the ticket and is responsible for providing a refund if the event is canceled. The Company's service provides a platform for the creator and event attendee to transact and the Company's performance obligation is to facilitate and process that transaction and issue the ticket. The amount that the Company earns for its services is fixed. For the payment processing service, the Company determined that it is the principal in providing the service as the Company is responsible for fulfilling the promise to process the payment and has discretion and latitude in establishing the price of its service. Based on management's assessment, the Company records revenue on a net basis related to its ticketing service and on a gross basis related to its payment processing service. As a result, costs incurred for processing the transactions are included in cost of net revenues in the condensed consolidated statements of operations.
Revenue is presented net of indirect taxes, value-added taxes, creator royalties and reserves for customer refunds, payment chargebacks and estimated uncollectible amounts, including estimates related to the effect of the COVID-19 pandemic. If an event is cancelled by a creator, then any obligations to provide refunds to event attendees are the responsibility of that creator. If a creator is unwilling or unable to fulfill their refund obligations, the Company may, at its discretion, provide attendee refunds. Revenue is also presented net of the amortization of creator signing fees. The benefit the Company receives by securing exclusive ticketing and payment processing rights with certain creators from creator signing fees is inseparable from the customer relationship with the creator and accordingly these fees are recorded as a reduction of revenue in the condensed consolidated statements of operations. See also the descriptions of the Company’s advance payouts under the sections Accounts Payable, Creators and Chargebacks and Refund Reserve below.
Cost of Net Revenue
Cost of net revenue consists primarily of payment processing fees, platform and website hosting fees and operational costs, amortization of acquired developed technology costs, amortization of capitalized internal-use software development costs, field operations costs and allocated customer support costs.
Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents includes bank deposits and money market funds held with financial institutions. Cash and cash equivalents balances include the face value of tickets sold on behalf of creators and their share of service charges, which are to be remitted to the creators. Such balances were $208.8 million and $256.8 million as of September 30, 2020 and December 31, 2019, respectively. Although creator cash is legally unrestricted, the Company does not utilize creator cash for its own financing or investing activities as the amounts are payable to creators on a regular basis. These amounts due to creators are included in accounts payable, creators on the consolidated balance sheets. The Company considers all highly liquid investments, including money market funds with an original maturity of three months or less at the date of purchase, to be cash equivalents.
The Company has issued letters of credit under lease agreements and other agreements which have been collateralized with cash. This cash is classified as noncurrent restricted cash on the consolidated balance sheets. The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statements of cash flows (in thousands):
September 30,
2020
December 31,
2019
Cash and cash equivalents$543,296 $420,712 
Restricted cash 2,632 2,228 
Total cash, cash equivalents and restricted cash $545,928 $422,940 
Funds Receivable
Funds receivable represents cash-in-transit from third-party payment processors that is received by the Company within approximately five business days from the date of the underlying ticketing transaction. The funds receivable balances include the face value of tickets sold on behalf of creators and their share of service charges, which amounts are to be remitted to the creators. Such amounts were $9.0 million and $51.1 million as of September 30, 2020 and December 31, 2019, respectively.
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Accounts Payable, Creators
Accounts payable, creators consists of unremitted ticket sale proceeds, net of Eventbrite service fees and applicable taxes. Amounts are remitted to creators within five business days subsequent to the completion of the related event. Creators may apply to receive these proceeds prior to completion of their events as creators often need these funds to pay for event-related costs. For qualified creators, the Company passes ticket sales proceeds to the creator prior to the event, subject to certain limitations. Internally, the Company refers to these payments as advance payouts. When an advance payout is made, the Company reduces its cash and cash equivalents with a corresponding decrease to its accounts payable, creators. As a result of the COVID-19 pandemic and its effect of causing creators to cancel, postpone or reschedule events, the Company temporarily suspended its advance payouts program on March 11, 2020, at which date the total advance payouts to creators related to future events was approximately $354.0 million. As of September 30, 2020, the advance payouts outstanding had reduced to approximately $227.1 million, as a result of creators fulfilling their refund obligations with creator funds as well as events taking place. The Company is exploring new ways to make advance payouts to qualified creators who meet strict guidelines and has started making advance payouts available to a limited number of low risk creators.
Chargebacks and Refunds Reserve
The terms of the Company's standard merchant agreement obligate creators to reimburse attendees who are entitled to refunds. When the Company provides advance payouts, it assumes risk that the event may be cancelled, fraudulent, or materially not as described, resulting in significant chargebacks and refund requests. If the creator is insolvent or has spent the proceeds of the ticket sales for event-related costs, the Company may not be able to recover its losses from these events, and such unrecoverable amounts could equal the value of the transaction or transactions settled to the creator prior to the event that is disputed, plus any associated chargeback fees not assumed by the creator. The Company records estimates for refunds and chargebacks of its fees as contra-revenue. The Company records estimates for losses related to chargebacks and refunds of the face value of tickets as an operating expense classified within sales, marketing and support. Reserves are recorded based on the Company's assessment of various factors, including the amounts paid and outstanding to creators in conjunction with the advance payout program, the size and nature of future events, the remaining time to event date, and actual chargeback and refund activity during the current year. The chargebacks and refunds reserve was $49.6 million and $2.7 million as of September 30, 2020 and December 31, 2019, respectively. The increase in the reserve balance during the nine months ended September 30, 2020 was the result of estimated losses from the advance payout program and estimated future refunds of its fees, relating largely to the COVID-19 pandemic. Prior to March 31, 2020, the Company included its chargebacks and refunds reserve in other accrued liabilities on the consolidated balance sheets, and has reclassified the balance as of December 31, 2019 on the condensed consolidated balance sheets included in this Quarterly Report on Form 10-Q to be consistent with the presentation as of September 30, 2020.
Impairment of Long-lived Assets
The carrying amounts of long-lived assets, including property and equipment, capitalized internal-use software, acquired intangible assets and right-of-use operating lease assets are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than originally estimated. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to future undiscounted net cash flows the asset is expected to generate over its remaining life.
If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. If the useful life is shorter than originally estimated, the Company amortizes the remaining carrying value over the revised shorter useful life.
During the nine months ended September 30, 2020, the Company determined that conditions resulting from the COVID-19 pandemic warranted an interim assessment of its long-lived assets balance. The Company performed a recoverability test and concluded no impairment of the carrying value was required.
Goodwill
Goodwill represents the excess of the aggregate fair value of the consideration transferred in a business combination over the fair value of the assets acquired, net of liabilities assumed. Goodwill is not amortized but the Company evaluates goodwill impairment of its single reporting unit annually in the fourth quarter, or more frequently if events or changes in circumstances indicate the goodwill may be impaired.
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The Company determined that the conditions resulting from the COVID-19 pandemic and the decline in the market value of the Company's common stock warranted an interim assessment of its goodwill carrying amount. On January 1, 2020, the Company adopted ASU 2017-04, which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. During the nine months ended September 30, 2020, the Company performed its analysis by comparing the estimated fair value of the Company to its carrying amount, including goodwill. The Company's analysis indicated that its estimated fair value, using the market price of its common stock, exceeded its carrying amount and therefore goodwill was not impaired and no additional steps were necessary.
Fair Value Measurement
The Company measures its financial assets and liabilities at fair value at each reporting date using a fair value hierarchy that requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:
Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 – Other inputs that are directly or indirectly observable in the marketplace.
Level 3 – Unobservable inputs that are supported by little or no market activity.
The Company’s cash equivalents, funds receivable, accounts receivable, accounts payable, funds payable and other current liabilities approximate their fair value. All such financial assets and liabilities are Level 1 and are measured at fair value on a recurring basis. There were no other Level 1 assets or liabilities recorded at September 30, 2020 and December 31, 2019.
Refer to Note 8 “Debt” for details regarding the fair value of our term loans and convertible senior notes.
3. Accounts Receivable, Net
Accounts receivable, net is comprised of invoiced amounts to customers who use FPP for payment processing as well as other invoiced amounts. During the three and nine months ended September 30, 2020, the Company recorded $0.1 million and $2.1 million, respectively, of incremental allowance for doubtful accounts, including estimated future losses in consideration of the impact of the COVID-19 pandemic. The following table summarizes the Company’s accounts receivable balances as of the dates indicated (in thousands):
September 30,
2020
December 31,
2019
Accounts receivable, customers $2,484 $4,979 
Allowance for doubtful accounts (1,748)(2,047)
Accounts receivable, net $736 $2,932 

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4. Creator Signing Fees, Net
Creator signing fees are incentives paid by the Company to secure exclusive ticketing and payment processing rights with certain creators. As of September 30, 2020, the balance of creator signing fees, net is being amortized over a weighted-average remaining contract life of 3.02 years on a straight-line basis. The write-offs and other adjustments for the three and nine months ended September 30, 2020 include estimated future losses in consideration of the COVID-19 pandemic. The following table summarizes the activity in creator signing fees for the periods indicated (in thousands):
Three Months Ended September 30,
20202019
Balance, beginning of period $16,750 $20,763 
Creator signing fees paid 41 7,254 
Amortization of creator signing fees (1,960)(2,826)
Write-offs and other adjustments (1,057)