STUB - NYSE

Good day, ladies and gentlemen. Thank you for standing by. Welcome to StubHub's Fourth Quarter and Year-End 2025 Earnings Conference Call. [Operator Instructions] Please note that this conference call is being recorded today, March 4, 2026. I will now turn the call over to Clinton Hooks with StubHub. Please go ahead.

Thank you, operator, and thank you for joining us to discuss StubHub's fourth quarter and year-end 2025 results. For reference, our fourth quarter and year-end 2025 earnings release, shareholder letter and presentation are available under the Quarterly Results section of our Investor Relations website at investors.stubhub.com. Before we begin our formal remarks, we need to remind everyone that the discussion today will include forward-looking statements. These forward-looking statements, which are usually identified by use of words such as will, expect, anticipate, should or other similar phrases are not guarantees of future performance. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect, and therefore, you should exercise caution when interpreting and relying on them. Although the company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can make no assurance related to its expectations. The company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise, unless otherwise required by law. We refer all of you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. We encourage investors to review our regulatory filings, including the annual report on Form 10-K for the year ended December 31, 2025, when it is filed with the SEC. During today's call, we will also be discussing non-GAAP financial measures, which we believe can be useful in evaluating the company's financial performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. Reconciliations of these measures to the most directly comparable GAAP measures are available in our earnings release, shareholder letter and investor presentation as applicable, available on the StubHub Investor Relations website. Please note that unless otherwise noted, our profitability and EBITDA discussions today refer to non-GAAP adjusted EBITDA. Joining me today are Eric Baker, our Founder, Chairman and Chief Executive Officer; and Connie James, our Chief Financial Officer. They will provide opening remarks, then take questions. With that, I'll turn it over to Eric.

Good afternoon, everyone, and thank you for joining us today. 2025 was a pivotal year for StubHub. We grew our marketplace, further strengthened our competitive position, transformed our balance sheet and became a public company. As we enter 2026, StubHub remains a leading global ticketing marketplace for live events with durable advantages, scale and liquidity, structurally strong financial fundamentals and a diversified global footprint. These fundamentals are built on our core strengths, which continue to drive our competitive advantage. First, our leading marketplace position with a category-defining brand and approximately 50% share of the secondary ticketing market in North America. Second, our proven network effects that create durable competitive advantages. As we attract more buyers through our leading distribution and global reach, sellers add more inventory and selection to our platform, which in turn draws more buyers and further expands our distribution. Third, our asset-light online marketplace model, which delivers consistent take rates, over 80% adjusted gross margins and strong free cash flow conversion. As an online marketplace, we generally do not take inventory risk and incur limited variable costs with each transaction, allowing us to reach large global audiences and generate substantial revenue with modest ongoing capital requirements. Fourth, our extensive data set across millions of global events. Our data on supply, demand, pricing and user behavior enables differentiated product innovation, marketing optimization and pricing intelligence that reinforce our market leadership. Fifth, scale is the defining advantage in our category. As the scale leader in secondary ticketing, our superior liquidity, trusted brand and operational excellence creates sustainable competitive advantages. And finally, an exceptional team with leadership experience built through decades of building and operating our business. I'm grateful to work alongside a group of high-caliber employees who show up every day for our customers, improving the product, strengthening trust and delivering operational excellence at scale. We're also fortunate to have a deeply experienced management team, leaders who helped build this company from the ground up, raising the bar for StubHub year after year. Together, these strengths position us to capitalize on the expanding live event industry. We sit in a unique position at the intersection of technology and live events as we pursue our vision to be the global destination for fans to access live entertainment. We remain relentlessly focused on improving every part of the StubHub experience from discovery and pricing transparency to fulfillment and support because a better fan experience strengthens trust, drives conversion and reinforces the marketplace flywheel. Before I touch on longer-term initiatives, I want to be clear about what is driving our business today. Our results and outlook are driven by our resale marketplace, which constitutes the vast majority of our revenue. In 2025, we delivered $9.2 billion of GMS, continued to grow, gained share and strengthened our competitive position. We expect that in 2026, StubHub's financial performance will continue to be driven by this core resale marketplace. Building on this foundation, our first several months as a public company have provided valuable perspective on our strategy to unlock new market opportunities. We believe direct issuance, non-exclusive, open distribution of originally issued tickets remains a transformational long-term opportunity for StubHub and the broader live event ecosystem. We have made progress through business development with marquee content rights holders across sports and music in multiple geographies, and we believe demand for this distribution model has been validated. Our experience has reinforced that the largest market potential will come from making direct issuance frictionless to adopt across a much broader range of rights holders. That requires reducing operational friction for partners with varying levels of technological sophistication and advances in artificial intelligence are materially expanding what is now practical to build on the supply side. By leveraging these advancements, we believe we can bring capabilities to market that would have been difficult to deliver even a year ago, including AI-assisted tools that automate workflows and simplify inventory management. For 2026, we are prioritizing building the product foundation required to scale direct issuance broadly. Accordingly, we are shifting from a primarily business development-led strategy to a more product-led strategy, building an AI-enabled technology-driven ecosystem that enables inventory to be contributed and managed with minimal operational burden. Development is underway to bring these supply-side products to market. We believe this approach positions direct issuance to become a durable growth engine when the self-serve capability is in place. This strategy shift means we will not be optimizing for immediate revenue growth, but for maximizing our revenue opportunity over the long term. Similarly, our efforts to build our advertising business are showing promising early results as we leverage our unique advantages. Early partnerships have helped validate the opportunity and are helping inform how we will scale advertising in a way that is truly additive by enhancing relevance and utility for customers. Our advertising business is generating modest revenue today, and we are continuing to iterate toward a model that enhances the seller and buyer experience. We are taking a disciplined approach to both initiatives, prioritizing scalable execution. This measured path forward reflects our commitment to maintaining the marketplace experience that defines our competitive advantage while compounding shareholder value over the long term. Finally, a quick note on the regulatory environment. We continue to operate within a generally favorable status quo that supports open functioning resale markets across jurisdictions. That said, public discussion around ticketing has increased in recent months, and we want to be clear about why we believe the secondary ticketing market and StubHub as a scale leader are defensible and durable over the long term. The secondary market solves durable ecosystem needs across a broad diversity of live event content. It is not dependent on any single event type or a narrow set of behaviors. A liquid resale market supports the ecosystem in foundational ways by: one, improving the category experience for consumers through trusted, fraud-protected ways to buy and sell tickets with ease and providing flexibility when plans change. Two, improving sell-through and pricing confidence in the primary market as consumers are more willing to buy earlier when they know they have a trusted option to resell. Three, enabling risk and cash flow management for content rights holders, teams, promoters and event organizers by providing liquidity and a pathway for inventory to be redistributed through power sellers and season ticket holders. And lastly, improving attendance utilization and venue economics by helping ensure tickets end up with someone who will attend, driving meaningful ancillary revenue through concessions, parking, merchandise and a better in-venue experience. Even if well-intentioned, we believe altering this vital link in the live event value chain ultimately harms the fan experience and the live event ecosystem overall. Regulatory change in live events is inherently complex. The live events ecosystem is a vast global surface of content and demand profiles, spanning everything from lower demand community events, small club shows to global music tours and the world's largest sporting moments across countless jurisdictions and market structures. Any framework that seeks to broadly reshape the resale market would need to account for a wide range of event types, seller profiles, consumer use cases and enforcement realities and would need to be implemented across many jurisdictions where live events occur. With that context, we believe public discussion tends to focus on a certain subset of the resale market, resellers that list large quantities of inventory on marketplaces for very high-demand concerts at high prices significantly above the original sale price. Based on our internal data, we estimate that approximately 10% of our GMS in 2025 was attributable to these types of high-demand concert ticket sales by resellers. Importantly, we believe that StubHub's durability is reinforced by our diversification and lack of concentration across sellers, content rights holders, buyers, event types and geographies. providing a level of insulation from potential regulatory changes that may affect any single subset of the market or any single jurisdiction. Finally, we have a responsibility to continue educating policymakers on the consumer protections and structural benefits that our marketplace provides and are continuing to bolster our government relations efforts to support this. We intend to engage constructively while operating responsibly to best serve fans around the globe. We are entering 2026 with a scaled, resilient core resale business, an improved competitive position that supports growth and scaling margins and a transformed balance sheet. We are also continuing to progress towards longer-term upside opportunities. Our commitment is straightforward, set expectations we can deliver upon and execute consistently. We intend to deliver results that reflect the strength and durability of the business. With that, I'll turn the call over to Connie to discuss our financial results and guidance.

Thanks, Eric. In 2025, we delivered $9.2 billion of GMS, up 6% year-over-year. Excluding the Eras Tour, our GMS grew 18% year-over-year, reflecting the underlying performance of the business. Our growth was driven by continued market share gains in North America, where we expanded our share in North America to approximately 50% of the secondary market. Internationally, our expansion outpaced growth in North America. Turning to our income statement. As a reminder, I'll discuss our financials on an adjusted basis, excluding stock-based compensation and other onetime items. Full reconciliations are available in our earnings release. First, on the fourth quarter. Beginning with the fourth quarter 2025, we generated $2.3 billion of GMS, down 8% year-over-year. This reflected lapping an unusually strong fourth quarter 2024, which benefited from several favorable dynamics, including the conclusion of the Eras Tour, a particularly strong MLB World Series and the timing of major concert on sales shifting across quarters. Excluding Eras-related comparability, fourth quarter GMS growth was approximately 6%. Revenue was $449 million or 19% of GMS, down 16% year-over-year. The change was primarily due to lower GMS, partially offset by lapping prior year direct issuance-related minimum guarantee structures that were treated as principal revenue and that we have since reduced. Additionally, our revenue as a percentage of GMS of 19% reflects our deliberate market share investments through take rate adjustments, consistent with our full year 2025 operating strategy to prioritize competitive positioning. Adjusted gross margin was 83%, up from 76% in the prior year period, reflecting the lapping of those minimum guarantee structures. Adjusted sales and marketing expenses were $234 million or 52% of revenue compared to $221 million in the prior year period or 41% of revenue. The change reflects our investments to accelerate market share in core resale. Adjusted EBITDA was $63 million, representing a 14% margin. This reflects the impact of our market share investments as we deliberately prioritize capturing market share and our continued investment in direct issuance capabilities during their early partnership development phase. For the full year 2025, revenue for the year was $1.7 billion, 19% of GMS compared to $1.8 billion in 2024. The performance was impacted primarily due to direct issuance-related minimum guarantee structures in the prior period and the impact of our market share investments on take rates. Adjusted gross margin for the year was 83%, up 200 basis points from 2024. The improvement reflects the lapping of the costs associated with minimum guarantee structures. The full year gross margin is representative of our current operational profile and demonstrates the structural advantages of our asset-light marketplace model where we facilitate transactions. Adjusted sales and marketing expenses were $943 million or 54% of revenues compared to $828 million or 47% of revenues in 2024. The increase reflected 2 primary drivers. First, our investments to accelerate market share in core resale where we deliberately prioritized market share capture. Second, our continued investment in building direct issuance capabilities during the early partnership development phase. Adjusted ops and support costs were $57 million, down from $59 million, flat as a percentage of revenue at 3%, reflecting improved operating efficiency. Adjusted G&A costs were $223 million, 13% of revenue, down from $250 million or 14% of revenue in 2024. The reduction reflects improved operating leverage as we continue to scale the business, including a reduction in professional service fees. Adjusted EBITDA was $232 million, equal to 13% of revenue. This result reflects 2 primary factors: First, the deliberate investments we made during the year, both in market share acceleration and in building longer-term initiatives. These investments successfully positioned us to achieve approximately 50% of North American secondary ticketing market share, establishing a foundation that supports fiscal '26 margin expansion. Finally, I want to highlight 2 factors impacting our net income. Our GAAP results for the full year include a nonrecurring noncash expense of $1.4 billion related to stock-based compensation granted prior to our IPO. The expense was triggered by the completion of our IPO. Accounting standards require recognition of these previously granted awards when their IPO-related performance conditions are satisfied. In addition, we incurred a nonrecurring noncash income tax expense of approximately $480 million related to the establishment of a valuation allowance on the deferred tax assets. Both stock-based compensation and valuation allowance expenses are excluded from our adjusted EBITDA calculations and have no impact on our cash flow or cash position. Turning to cash flow. I want to spend a minute on how cash is generated in our marketplace model. First, our cash conversion cycle benefits from the timing mechanics of ticketing. We collect funds from buyers at checkout while seller payouts occur later, often closer to or after the event date. This timing difference creates a recurring balance of seller proceeds on our balance sheet and contributes to our cash generation. Our business is also structurally asset-light. We don't generally take inventory risk and capital expenditures remain modest relative to the size of our business. We also benefit from net operating losses that reduce cash taxes in the medium term. Finally, because of the seasonality of live events and the timing of major tours and sports calendars, free cash flow can be variable quarter-to-quarter. For this reason, we evaluate free cash flow on full year and trailing 12-month periods rather than any single quarter. In 2025, our free cash flow represented nearly 70% conversion of adjusted EBITDA. This figure also includes interest costs during the period, which has since been reduced as a result of our debt repayment. Turning to the balance sheet. In 2025, we reduced our total debt by approximately 35% through the repayment of approximately $900 million of our U.S.-denominated term loan, bringing our total debt down to $1.5 billion at year-end. We also ended the year with approximately $1.2 billion of cash and cash equivalents or $494 million, net of payments due to sellers. As we scale, we expect the business to continue generating strong cash flow, and our priority remains maintaining a strong balance sheet and reducing leverage over time. Turning to our fiscal year '26 guidance. Before I discuss the specifics, I want to address why we are providing annual rather than quarterly guidance. The live event market is seasonal and can be variable quarter-to-quarter where the timing of major concert on sales and event schedules can shift across quarters from year-to-year. This can create lumpiness in quarterly growth rates even when underlying business momentum is steady. Fourth quarter '24 and fourth quarter '25 GMS illustrate this dynamic clearly. Fourth quarter '24 benefited from unusually favorable timing, including the finale of the Eras Tour and a concentrated set of major concert on sales, contributing to an exceptionally strong period and year-over-year GMS growth of 47%. Fourth quarter '25 reflected the inverse. Our GMS was down 8% year-over-year, driven by the lapping of this unusually strong comparison and by major concert on sales being more spread across quarters. Neither quarter on its own provides a representative view of the business. In fact, our market share was higher in the period GMS declined than in the period GMS grew significantly. For these reasons, we believe our business is best evaluated on an annual and last 12 months basis. Our guidance is grounded in what we control and what we believe we can execute with high confidence. For 2026, this reflects the earnings power of our core resale marketplace and includes disciplined operating expenses to support direct issuance and advertising without assuming any material revenue contribution from either initiative. For 2026, we expect to grow GMS to between $9.9 billion and $10.1 billion, representing 9% growth at the midpoint and expand adjusted EBITDA to between $400 million and $420 million as our marketplace flywheel strengthen and operating leverage increases at scale. Our GMS growth formula is straightforward: North American market growth, incremental market share gains plus international growth. Let me dive into each of these segments. First, North American secondary market growth. This market has historically grown at low double-digit rates. While there will continue to be a comparability impact from the all-in pricing transition until we lap its implementation in May, we believe underlying growth in the market remains strong. Second, market share gains in North America. We have a demonstrated track record of outgrowing the market in recent years. For 2026, we expect to continue gaining share while reducing these investments and increasing customer acquisition efficiency. Last, international growth. International markets account for approximately 15% of our GMS. We expect GMS in international markets to grow at an accelerated rate, benefiting from earlier-stage market development. Overall, our adjusted EBITDA guidance assumes the economic engine that has long defined StubHub remains consistent. Take rates in the 20% range, over 80% adjusted gross margin and improving operating efficiency as we scale. Given the structural strength of our unit economics, an important driver of earnings power is how efficiently we scale operating expenses, particularly adjusted sales and marketing, our largest expense line. To that end, our 2026 plan reflects 2 key strategic refinements. First, we are evolving our direct issuance strategy towards a more scalable technology-enabled model, which naturally reduces investment intensity. And second, we are raising customer acquisition efficiency in core resale. Acquisition efficiency is an input we control and our improved scale and conversion allows us to earn higher returns on marketing spend while growing. In 2025, we deliberately lowered acquisition efficiency, spending more per transaction to accelerate market share gains. The goal was to strengthen the marketplace in durable ways. As our share of transactions increased, our competitive position improved, and we created advantages that continue to compound through improved conversion. Higher conversion means each marketing dollar generates more transactions and more gross profit than it did previously. As a result, in 2026, we believe that we can raise acquisition efficiency while continuing to grow and take share. Together, these refinements reflect how a scaled marketplace model inflects. As conversion improves and our competitive position strengthens, we can allocate marketing dollars more efficiently while growing, expanding EBITDA through operating leverage and generating strong free cash flow. With that, we will now open the call to Q&A. Operator?

[Operator Instructions] the first question comes from Doug Anmuth with JPMorgan.

You're gaining share in retail, you talked about hitting kind of around the 50% level. Does the 9% growth in GMS just in the core retail market is growing slower than you initially expected in '26? Or is there something else going on?

Sure. Doug, thank you for the question. Appreciate it around growth. And let me revisit just sort of the general framework around growth and how we think about it, and then I'll hand it to Connie to get into some of the specifics. So again, as we've sort of said, we're very -- our market has been very strong. More people are going to live events. They're going to a greater breadth of events. They're doing it all across the world. So the North American market has been strong. As we've said, too, we continue to gain share in the market as we're inflecting margins. So that's happening. And then we're seeing increased throughput internationally, these global events that are taking place and people traveling. So there's a lot of great tailwinds in the market, which is allowing us to grow and grow while we take share. But with that, let me throw it over to Connie for the details.

Yes. Thanks, Doug. Good to be with you. And I'll just touch on the GMS drivers, and there's really 3 key ones, which you've picked up on a couple of them. So first, the market growth, as Eric mentioned, we benefit from operating in a really healthy overall North America secondary market that has consistently grown low double digits. That said, what we know to be true is we're going to continue to have this all-in pricing overhang for the first 5 months. We do anticipate continuing to accrete some modest share gains and then layer on top of that international growth. So all of that, call it, ladders up to the 8% to 10% GMS. And what I would also add is, again, it's anchored in what we're seeing today. The good news is quarter-to-date, we're seeing really healthy top line growth, expanding margins, all supportive of our full year guide.

And then if I could just follow up on direct issuance, you've kind of talked in the past about like '26 being a potentially industry inflection point. And now obviously, there's a strategy shift that's taking place. I guess what has changed most here in your view on the outlook and progress for direct issuance?

Sure. Thank you for the question, Doug. And let me walk you through what's evolved on direct issuance and what we've seen and why we've made this deliberate decision to shift to the product development for this year. So just for everyone again, to set the context, direct issuance for us is this belief in this open distribution. Content is going to want to come, sell their tickets directly over StubHub and use our data and distribution to do so. We've had great success we had with folks like the Yankees, Ambassador Theater Group and others to prove this out. And as in the past 6 months, as we've gone out and we've been excited about it, there's a lot of, we believe, demand and enthusiasm for it. And quite frankly, we've been very excited about how broad and deep that is, by which I mean there's a long tail of different types of events and a great breadth of them. What we have found, Doug, in going through it with the team is that really, we think one of the key unlocks to unlock it even faster is eliminating friction on the product side, make it easy for people to use the product and technology because the will is there, everything makes sense. And that really unlocks more of what we talked about with a number of customers we had seen where you have this like self-serve ecosystem, which is a great solution for the customer. It's also a great business model that scales very nicely. And so as we looked at and we sat down, we said really with what's going on, we should focus in '26 on developing that product, particularly with the fact that given everything going on with AI, there's a real chance to advance those tools quickly and to get them to a good place. As a result, that does mean that we are deliberately shifting to a longer-term focus. We think we will create more value in the long term rather than focusing on the short-term revenue creation this year.

Your next question is from Eric Sheridan from Goldman Sachs.

Maybe a 2-parter, if I can. In terms of learning on some of the key dynamics from ramping marketing and gaining market share in '25, can you talk a little bit about what the key lessons learned from that were? And how it informs the theme you're talking about tonight with respect to being more effective with acquisition and growth investments in '26? And if possible, a way to frame sort of that effectiveness either quantitatively or qualitatively '26 relative to maybe some of the return profile in '25?

Sure, Eric. Thank you for the question. Appreciate it. Let me give you an overview about some what you're asking about what are -- how do we think about this core secondary engine and what does that mean in terms of getting these inflections. And I'll give you my sense of that, and then Connie can give you more of the financial detail as well. So I think as you recall, our whole fundamental thesis that was from our lived experience is that we saw that if you can get -- if you have the StubHub asset and you run it the right way and you can get the market share back and hit the right point of relative market share, you accelerate all these different flywheels that you get and network effects because you're in a marketplace business. So whether that's you've got more data, the conversion goes up, the liquidity flywheel, all these good things happen. Therefore, what we've seen and what you see in marketplace businesses is that you're able to hit a point where you get this beautiful thing, you're able to grow and take share while increasing your margins, which is why it's such a great business to be in. That's not just something that we've observed about marketplaces, be it the Airbnbs and others of the world. That's our lived experience that we've seen in building these businesses and what we saw at viagogo. And so to your point, what we said is in 2025, we really were focused on finishing off and pushing this concept of the market share and doing some of those things. And we really believe and as our thesis was that we would see we would get to this relative market share, be 3x greater than other people and start seeing this virtuous cycle occur. As Connie, I'm sure, will walk you through, not to steal her thunder, you can see what we're now saying in our guidance, we're seeing that we will be able to grow, continue to take share and inflect the margins. And I think as Connie will tell you, we sit here now, whatever it is in March, observing that this is, in fact, happening. So with that, let me turn it over to Connie.

Yes. I think that's exactly right, Eric. And also thanks, Eric, for joining the call today. If you step back and really think about it, we were explicit that '25 would be a period of accelerated investment in particular into these relative market share, and we were really pleased with the outcome having secured about half of the market. So what you would have seen is an elevated period of sales and marketing. Late December, we decided to call it turn the dials given the flywheels and the benefits that Eric explained that started to show up, and that has continued. So we are seeing better efficiency coming through, which is resulting in these expanded margins, which Eric mentioned, we're seeing as we sit here, 2/3 the way for the first quarter. So all of that, again, gives us confidence of the stickiness and the benefits that we've seen and supports the full year guide.

We'll now go to Justin Post from Bank of America.

Great. Just wondering what you're thinking about for the concert season this year? You mentioned you had some comments on that in November and also the World Cup impact and then I have a follow-up. And how that's incorporated in your guidance?

Sure. I'll just give you a couple of comments generally, Justin, and thank you for the question for being on the call, and then Connie can talk. So obviously, as we said, in terms of the concert season, we've seen a number of very exciting concerts going on sale in January and whatnot, and that's been great. Obviously, the World Cup is a wonderful event that sort of epitomizes the fact that we have this global platform. I do think as Connie will walk you through some of the guidance slots, I think she'll probably also touch on why we guide annually. And I think it's sort of key in what we hope to articulate before because there's sometimes a little bit of lumpiness of when things go on sale. But with that, let me turn it over to Connie.

Yes. Thanks, Eric, and I appreciate jumping on the call, Justin. I think as we sit here today, things look really healthy. We typically look at the overall opportunity for the year and call it, Tier 1, Tier 2, Tier 3 events. In relation to your question specifically around World Cup, what we have seen in terms of our forecast assumptions is that we've decided to include that as a Tier 1 category. To be explicit, the Eras Tour was in a league of itself. As and when the World Cup continues to progress, we'll continue to keep you updated. In addition, I think you had a question just around how does perhaps some seasonality or as Eric talked, lumpiness occur from a concerts perspective and perhaps that just relates to what we saw in the fourth quarter. You're absolutely right. There can be movement. But again, the good news is when you look at it on an annualized basis, it tends to normalize. So where we sit from today, the overall market looks really healthy.

Great. And then I'd love to hear any updates on the U.S. secondary regulatory environment? And/or have you learned anything so far from the Ticketmaster trial and opening arguments? Anything you might have learned from that?

Yes. Thank you for the question, Justin. And let me walk you through how we think about regulatory, and then I can touch on the trial that's going on. So the first thing is that from -- just to give people sort of our orientation is, started this business 25 years ago basically to give consumers a safe, secure way to buy tickets. And so that you wouldn't have fraud, you wouldn't have problems. And so we are, by definition, sort of we serve the consumer, we serve the fan, and that's what we do. And what I would say is we try and work as cooperatively with legislators and regulators because I believe, certainly, that in good faith, they have the same thing. They work for their citizens. They want people to have a good experience. They're working for the fan to make sure they can get into their events and get in there without having any problems. And so that makes sense. And obviously, we mentioned all-in pricing earlier. That's a great example where we worked and lobbied for that because we believe it's great for the fan and the consumer, even if it was a short-term headwind, as Connie said, because in the long term, anything that's good for the fan and the consumer is good for StubHub, and that's how we think about it. Now let me talk about the general regulatory environment today as it stands and some of the chatter that's out there. We generally -- first thing for people to understand is that we're in a very positive environment. It's legal to resell tickets. People are enthused about it. There's no issue going on today that is sort of hindering that in any meaningful way. What we are talking about now is why is that the case? And why has it been the case for decades. And I think there's two things that people need to understand. One is that, as I said, we're providing a service that's great for fans to give them access and eliminate fraud. And two is that it's actually very good for the content ecosystem. So in 2 ways. One is that if they're selling tickets and people have a safe, secure way to resell what they can't use, it's going to make it easier to sell the ticket in the first place. Secondly, is if you can unload tickets and put it in the hands of someone who can use it, you're more likely to fill the seats in the arena. So for all those reasons, that's why it has looked this way. Now let me get to your question twofold. One is, well, what is the regulatory -- what's the chatter? Are there concerns? What could they be? How do we think about it? So when we look at it today, Justin, all the real public discussion is really focused on what we see as a very narrow set of the market, which is for very high demand concerts where people are concerned or there are people who buy up tickets for those concerts in bulk and then sell them at a markup in bulk. They sell a number of tickets. So that's really where the focus has been. To give you a sense of how we -- because we think about this a lot, just what that surface is for our company as we approximate it to the best of our belief, you look at it that, that's about 10% of our global GMS. And that's 10% of our -- when I say global GMS for those types of events, that's across everything, across jurisdictions, across locations, across types of concerts, across different primary ticketing companies. So we have a very diverse catalog. That's just to give people a sense of surface. I know that's important to them and so forth. Finally, in terms of the Live Nation trial that's going on, I think it's important for people to hopefully understand, let me give you context for that. The DOJ going to trial with them is talking about Ticketmaster being a monopoly in primary tickets primarily. They've also talked about whether or not they tie things together, but let's stick with the monopoly power, I think, is the main focus. To us, that's really fundamentally, if you listen to what they're talking about, is the need for more open distribution. So they're basically talking about what we've called direct issuance and open distribution, which is that isn't the best outcome for any consumer and quite frankly, for content to allow them to take a ticket and distribute it ubiquitously, non-exclusively and have the outlets compete to give the best service to the fan. We're all for that. We support that. We're obviously working for the fan the same way other people do. All that being said, what we've also said is we do not bake in or anticipate any changes to what the status quo. I'm in no position to predict what may or may not happen in a courtroom or between the governments and Live Nation. We'll see how it plays out. If anything was to come to pass that was to push forward more of this open distribution agenda, that would only be great for fans and therefore, great for StubHub, but we will see.

And next up is Mark Mahaney from Evercore ISI.

I'll just ask one question. On the advertising initiatives that you've had that is in advertising revenue. So you started rolling that out in the fourth quarter. Can you talk about what kind of traction -- you just mentioned it briefly in your opening remarks? How much revenue you've been able to generate so far, what the demand looks like in '26, how much you're baking into your outlook for '26? I know it's helpful on the top line, but particularly on the bottom line, too. So just how much contribution you expect from there? And when do you think you'll have a fully rolled out, the way you'd like it to be, advertising option? Is that this year? Or is that still -- is that more like a '27 event?

Thank you, Mark. Appreciate the question. Thanks for being on the call. Let me give you first on the advertising piece, what has evolved and how we've made some deliberate decisions in terms of how we're thinking about the strategy and timing there. I'll walk you through that, and then Connie can address sort of how that fits into guidance. So advertising, big opportunity for us. We know that we have a great group of users and folks on the site that have a very passionate and clear intent that people want to reach. We also know we have a bunch of sellers on the platform who have a perishable item and they want to get their ticket in front of the right buyer. So there's a lot of demand and interest for that. We always said that we have to get that right in terms of the customer experience, the experience for the buyer and the seller and then how it fits in our business before we're going to scale it up. And therefore, we did what we said we were going to do, which is in the fourth quarter, we started rolling out the ad product, sponsored listings as well. And we saw a good reaction from sellers to that. We started generating revenue and testing. What we realized in our thinking is we said, gosh, it's very important that we get this right to maximize the experience for the long term and maximize the business model for the long term so that we create maximum value for the participants in our ecosystem as well as for our shareholders. And in doing that, we've come to the determination that we want to spend more time working that through, working the product through and experimenting with it in this coming year. And that's the conscious decision we made, which we think will drive more value over the long term, even at the sacrifice of near-term revenue. With that backdrop, I'll turn it over to Connie, who can more specifically address your question about how that filters through guidance.

Thanks, Eric, and I appreciate you jumping on the line, Mark. In relation to how much revenue did we have in the fourth quarter, again, a very small modest amount. As Eric mentioned, we're still in testing mode on a small portion of the surface, albeit, again, super excited about the longer-term opportunity. And then we've been really explicit about ensuring that our guide is anchored in what we see in relation to today. And so we've taken the approach to have a very modest amount of revenue flowing through. You can think, call it, tens of millions for this year. That being said, as that continues to progress and change, we'll provide you with updates.

John Blackledge from TD Cowen is up next.

It's Logan Whalley on for John. A question around agentic commerce. Could you discuss your early learnings from your partnership with OpenAI and ChatGPT? And then looking forward, how do you expect to compete with other marketplaces in a world where people could be using chatbots to purchase tickets and other goods?

Thank you for the question. Logan, appreciate it. Let me -- I think you're asking about AI and how we think about that, what our experience has been in different ways. So let me start by sort of just setting the table for how we're thinking about that, how we think we're positioned. So the first thing is, obviously, AI is a transformational technological development across the world, across society. It's a big thing. There'll be a lot of, I'm sure, disruption. And with disruption comes risk and opportunity. So we spend a lot of time thinking about this and how we mitigate risks and how we see those opportunities. And I think as we've looked at and thought about it, I'll tell you how we think about it. We think we're very well positioned for what's going on if we execute and innovate appropriately. The first thing that is important to note is we are in the live event end market. So that is a pretty good end market to be in. We're very optimistic that it will be a long time before you're watching AI robots participate in the Super Bowl and people want to go to live events. So that's a good thing. The second thing is that we are a marketplace business, and we think it's a marketplace business with the complexity that we have operationally, that is also a good place to be. But let me be more specific to probably some of the questions you had about how we think about it. There's what we call the marketplace operations layer and then there's an experience layer to it. And I'll tell you how we think about each. So on the marketplace operations of our business, we think, is not something that's easily replicable, so to speak, just by an agent in terms of you've got very fragmented supply. You've got to have trusted fulfillment, payments, fraud prevention, customer support, financial protections. And quite frankly, AI will help us as the largest player with the most data excel at providing the best experience for customers in that. So we think that's good. On the experience side and as you note, there are people who are going to be making purchases through chat and agent-based interfaces with us. And we've been at the forefront of doing a number of things, as you mentioned, with some of our partners. What we're excited about is that by having the most data on our platform about you as a user, if we are able to -- what we're working on is weaving AI into the product, we can create that great experience for you at StubHub that's unmatched anywhere else. We also think that it is a unique emotive experience where humans relative to other things are more likely to want to have the experience of even looking at what event they want to go to, discovering those things. It's not like finding the cheapest toilet paper, so to speak. So for all those reasons, we think there's a lot of opportunity. I'd also say on that discovery layer, it's creating more demand at the top of the funnel. So you're adding more ways to get people in, in a great fashion. And so we think that's great. And we think that at the top of the funnel, what we found is they want to make sure they're directing people to a trusted brand that has the customer service and execution, which is key because it's not just driving someone to content, where if you get the content, you're done and there's nothing else to it. So we think there are a lot of tailwinds. The last thing I would say, and Connie may add something here, as with everyone, I'm sure everyone knows, there's tremendous cost efficiencies and productivity gains for anyone who applies this the right way, which we're very focused on. And that's why it's very important to us to be taking advantage of AI every way we can in what we do. We take it, as I say, extremely seriously because any time there's a big disruption, there's big opportunity. But if you don't work with purpose and with innovation, of course, there's risk. And so we're working hard every day to do that. But maybe on the efficiency side, I'll let Connie add a couple of things if she has it.

Yes, absolutely. And just happy to build on what Eric said, which is, again, we're excited about the technology, a huge number of benefits across the board. One of them clearly being cost efficiency. The team has already done a phenomenal job in terms of ops of support, really thinking about how we can create a level of efficiency, but perhaps even more importantly, how can we continue to delight the customer with a better way to interact. So seeing some really early traction there and obviously more to come. And then more broadly, even just from an engineering perspective, we know there's a huge opportunity. So again, a tremendous number of benefits, excited about the technology and how it plays out.

Next question is from Brian Pitz, BMO Capital Markets.

Eric, maybe more broadly, with primary ticketers pushing initial prices ever higher via dynamic pricing, can you comment on whether this is squeezing the volumes or margin spreads historically available to you in the secondary market? And then maybe number two, apologies if I missed this, but can you quantify the GMS growth and progress made in international markets during the fourth quarter? And are there any specific remaining regulatory hurdles regarding viagogo's global presence?

Sure. So thank you. Thank you for the question. So a couple of different things in there. So let me try and make sure I address or give you a sense on the different things you're talking about. So I think a question there about primary ticketers and sort of how they use dynamic pricing and how that may impact the business. And then you had some specific questions on international specifically. So let me try to answer those as best I can and then flip it over to Connie for more of the nitty gritty. So I think in terms of the primary companies and these different policies they've talked about with dynamic pricing and other things that they're doing, I just want to set the context for everyone. Again, doing this for 25 years. We've been competing with the Ticketmaster and other primary companies for many, many years, for decades. And they obviously have always had an interest in trying to control more of that system and capture things. Again, they don't work for the fan, the same way that we do, and there's nothing wrong with that. They just have a different business in terms of what they want to do. And so this concept of dynamically pricing and doing things has been around for a long, long time. So I would just put that into that context. And therefore, both historically and today, we have not seen any impact from those types of policies on our business. It continues again. We've got a broad and deep catalog. We're serving a real need for consumers, and we think a real need for the ecosystem. So we haven't -- and that's just to give you the historical take of that not only today, but on decades of experience of something that has been around. Internationally, I'll just -- before going over to Connie, what I would say is that international is just a phenomenal opportunity for us. One thing also getting back into sort of the history of it is that viagogo, which I started, it was an international company. And so we have a heritage in our DNA is servicing things internationally. We had to be able to service the languages, the jurisdictions, the payments. And so as events become more and more international, it's phenomenal as things move to Asia and Latin America, it's phenomenal. I think there's definitely a lot of speaking about our friends who are in the promotion business as they always talk about, there's tremendous opportunity in those markets, and we think that's great. So we're bullish on it. In terms of any more specifics that we can or can't comment on, I will throw it over to Connie.

Great. Thanks. And just to address your question in relation to what was the fourth quarter growth rate in the international business. We don't break it out specifically, but what I can tell you is that it was growing at multiples of the North America. As Eric mentioned, we have a phenomenal footprint operating in over 200 countries and really continue to be excited about the opportunity.

And everyone, we have time for one final question. It comes from Andrew Boone, Citizens.

I wanted to go back to the marketing efficiency. As we think about the EBITDA guide for 2026, should we compare marketing levels for 2026 to 2024? Is that the right level of normalization? Or can you provide us with any others [indiscernible] as we think about that expense normalizing? And then you guys made gains in 2025 with ReachPro. Can you help us better understand what are the benefits of that? And then how do you approach making additional gains? Or how aggressive do you want to be with that product this year?

Thank you for the question. It sounds like you had some questions about the guide around some of the marketing stuff and some questions around ReachPro. So let me try and address the level of the product stuff in ReachPro a little bit, and then I'll give it over to Connie to tie out on some other things. So yes, just so everyone understands, ReachPro is a point-of-sale system that sellers can use to manage their tickets and manage their flow. It's just basically like software tools. It's not anything that we're selling or whatnot, but it becomes a default for people to use. When you get that default in the operating system, it has tremendous benefits data-wise. People make you the first quarter call. So it's very helpful in terms of getting some permanent benefit in terms of share and whatnot. We basically, as part of the share gains we got, we're able to deploy ReachPro, and I think Connie will talk about how we've accreted tremendous share in that and have a great trajectory. That is also in a good place where, again, one of the benefits of the flywheels is once you become 3x larger than someone else and more efficient and this -- and you have a superior tool, you can get continued acceleration of people adopting it, which has continued benefits for our system and for our customers. But let me throw it over to Connie because I think you had some questions about marketing.

Yes. I think before we go into the details on marketing, it's probably worthwhile just to step back and think about the broader building blocks of the guide that just might help provide a bit more context. We did touch on growth, which we know we have 3 drivers, again, operating in a really healthy overall North America secondary market, but noting again, the overhang of all in pricing in those first 5 months. In addition, we do anticipate continuing to accrete modest share gains. And then as we just discussed, we've got a tremendous international business that you can layer on top. What's also important to recall is if you step back and you think about last year, we were explicit about taking a point uptake and investing it in order to accelerate market share. Again, incredibly pleased with the progress we made in capturing nearly half of the market. But as we move forward, we would expect take to -- be more consistent with what we've seen historically, call it, in that 20% range. And then specifically, I think you were touching on, well, what should we expect in relation to marketing efficiency. Again, last year, it was a period where we had a deliberate decision to invest, which ran sales and marketing as a percentage of revenue at a bit of an elevated rate. You would have seen in the first quarter, we were at 55%. By the end of Q4, we're about 52% normalized. And what I would say is you should continue to see increased benefit flowing through. So all of that, call it, ladders up into expanding margins at the bottom line.

Thank you, everyone, that does conclude our question-and-answer session. I'd like to hand the call back to Eric Baker for any additional or closing remarks.

Yes. I just want to say thank you to everyone. I appreciate folks making the time and taking the interest, and we appreciate it greatly. So thank you very much.