Eventbrite, Inc. - Quarter Report: 2022 September (Form 10-Q)

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, 2022


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

For the transition period from _____ to _____

Commission File Number: 001-38658

_______________________________________________________________________________

EVENTBRITE, INC.

(Exact name of registrant as specified in its charter)

________________________________________________________________________________


Delaware			14-1888467
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)
535 Mission Street, 8th Floor, San Francisco, CA 94105 (Address of principal executive offices) (Zip Code) (415) 692-7779 (Registrant's telephone number, including area code) Not applicable (Former name, former address and former fiscal year, if changed since last report)

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


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

_________________________________________________________________

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

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

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


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

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

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 27, 2022, 81,049,990 shares of Registrant's Class A common stock and 17,640,167 shares of Registrant's Class B common stock were outstanding.

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EVENTBRITE, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED

SEPTEMBER 30, 2022

TABLE OF CONTENTS



		Page
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS		1

PART I. FINANCIAL INFORMATION
Item 1.	Unaudited Condensed Consolidated Financial Statements	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Stockholders' Equity	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 6.	Exhibits	37
Signatures		38

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), that involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "appears," "shall," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential," or "continue," or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements related to the impacts of the COVID-19 global health pandemic, including its impact on us, our operations, or our future financial or operational results; the duration and extent of, and recovery from the COVID-19 global health pandemic, including the impact of vaccines, the introduction and spread of new variants or mutant strains of the virus, the removal or reimposition of restrictions on in-person events, the market response to the recovery, our expectations regarding the timing of recovery of paid ticket volumes and event creator and event attendees’ behavior in relation to the recovery; statements regarding 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; changes in our business model; our advance payout program; the sufficiency of our cash, cash equivalents and investments to meet our liquidity needs; our predictions about industry and market trends; our ability to attract and retain creators; our ability to successfully operate internationally; our ability to attract and retain employees; 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 and the potential effect of any current litigation or audits in certain jurisdictions with regard to indirect tax matters on our business, financial position, results of operations or liquidity.

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 our Annual Report on Form 10-K for the year ended December 31, 2021, our Quarterly Report on Form 10-Q for the quarters ended March 31, 2022 and June 30, 2022 and this Quarterly Report on Form 10-Q. We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q. You should not rely upon forward-looking statements as predictions of future events.

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

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PART I. FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements


EVENTBRITE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value amounts and share data)
(Unaudited)
	September 30, 2022		December 31, 2021
Assets
Current assets
Cash and cash equivalents	$	675,817	$	634,378
Funds receivable	26,525		18,197
Accounts receivable, net	2,009		1,110
Creator signing fees, net	929		1,184
Creator advances, net	825		862
Prepaid expenses and other current assets	9,425		17,877
Total current assets	715,530		673,608
Restricted cash	1,344		1,781
Creator signing fees, noncurrent	1,253		2,225
Property and equipment, net	6,975		7,162
Operating lease right-of-use assets	6,175		10,940
Goodwill	174,388		174,388
Acquired intangible assets, net	24,189		31,116
Other assets	1,784		1,756
Total assets	$	931,638	$	902,976
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable, creators	$	354,941	$	285,222
Accounts payable, trade	723		1,083
Chargebacks and refunds reserve	20,397		21,395
Accrued compensation and benefits	11,297		10,910
Accrued taxes	9,697		11,068
Operating lease liabilities	3,473		4,149
Other accrued liabilities	13,549		24,139
Total current liabilities	414,077		357,966
Accrued taxes, noncurrent	8,689		12,868
Operating lease liabilities, noncurrent	3,689		8,677
Long-term debt	355,067		353,564
Other liabilities	—		1
Total liabilities	781,522		733,076
Commitments and contingencies (Note 15)
Stockholders’ equity
Preferred stock, $0.00001 par value; 100,000,000 shares authorized, no shares issued or outstanding as of September 30, 2022 and December 31, 2021	—		—
Common stock, $0.00001 par value; 1,100,000,000 shares authorized; 98,679,389 shares issued and outstanding as of September 30, 2022; 97,246,465 shares issued and outstanding as of December 31, 2021	1		1
Additional paid-in capital	943,083		903,470
Accumulated deficit	(792,968)		(733,571)
Total stockholders’ equity	150,116		169,900
Total liabilities and stockholders’ equity	$	931,638	$	902,976

(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,
	2022		2021		2022		2021
Net revenue	$	67,472	$	53,367	$	189,388	$	127,496
Cost of net revenue	23,450		18,238		66,465		49,966
Gross profit	44,022		35,129		122,923		77,530
Operating expenses
Product development	22,249		16,678		63,308		48,393
Sales, marketing and support	14,455		11,360		41,866		23,357
General and administrative	20,596		18,319		58,908		61,080
Total operating expenses	57,300		46,357		164,082		132,830
Loss from operations	(13,278)		(11,228)		(41,159)		(55,300)
Interest expense	(2,826)		(2,814)		(8,461)		(13,200)
Loss on debt extinguishment	—		—		—		(49,977)
Other income (expense), net	(5,100)		(2,460)		(9,818)		(2,882)
Loss before income taxes	(21,204)		(16,502)		(59,438)		(121,359)
Income tax provision (benefit)	(80)		311		(41)		885
Net loss	$	(21,124)	$	(16,813)	$	(59,397)	$	(122,244)
Net loss per share, basic and diluted	$	(0.21)	$	(0.18)	$	(0.61)	$	(1.30)
Weighted-average number of shares outstanding used to compute net loss per share, basic and diluted	98,543		94,462		98,069		93,794

(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 A			Common Stock-Class B			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance at December 31, 2021	79,524,112	$	1	17,722,353	$	—	$	903,470	$	(733,571)	$	169,900
Issuance of common stock upon exercise of stock options	207,361	—		—	—		1,464		—		1,464
Issuance of restricted stock awards	2,515	—		—	—		—		—		—
Issuance of common stock for settlement of RSUs	341,723	—		—	—		—		—		—
Shares withheld related to net share settlement	(117,374)	—		—	—		(1,711)		—		(1,711)
Conversion of common stock from Class B to Class A	3,266	—		(3,266)	—		—		—		—
Stock-based compensation	—	—		—	—		12,968		—		12,968
Net loss	—	—		—	—		—		(18,185)		(18,185)
Balance at March 31, 2022	79,961,603	$	1	17,719,087	$	—	$	916,191	$	(751,756)	$	164,436
Issuance of common stock upon exercise of stock options	156,014	—		—	—		1,405		—		1,405
Issuance of restricted stock awards	39,795	—		—	—		—		—		—
Issuance of common stock for settlement of RSUs	559,321	—		—	—		—		—		—
Shares withheld related to net share settlement	(195,195)	—		—	—		(2,084)		—		(2,084)
Conversion of common stock from Class B to Class A	1,218	—		(1,218)	—		—		—		—
Issuance of common stock for 2018 Employee Stock Purchase Plan (ESPP) Purchase	79,282	—		—	—		790		—		790
Stock-based compensation	—	—		—	—		14,356		—		14,356
Net loss	—	—		—	—		—		(20,088)		(20,088)
Balance at June 30, 2022	80,602,038	$	1	17,717,869	$	—	$	930,658	$	(771,844)	$	158,815
Issuance of common stock upon exercise of stock options	28,708	—		—	—		158		—		158
Issuance of restricted stock awards	7,185	—		—	—		—		—		—
Issuance of common stock for settlement of RSUs	506,715	—		—	—		—		—		—
Shares withheld related to net share settlement	(183,126)	—		—	—		(1,543)		—		(1,543)
Conversion of common stock from Class B to Class A	77,702	—		(77,702)	—		—		—		—
Stock-based compensation	—	—		—	—		13,810		—		13,810
Net loss	—	—		—	—		—		(21,124)		(21,124)
Balance at September 30, 2022	81,039,222	$	1	17,640,167	$	—	$	943,083	$	(792,968)	$	150,116

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EVENTBRITE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands, except share data)

(Unaudited)


	Common Stock-Class A			Common Stock-Class B			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance at December 31, 2020	69,475,511	$	1	23,179,274	$	—	$	913,115	$	(597,544)	$	315,572
Cumulative effect adjustment upon adoption of ASU 2020-06	—	—		—	—		(45,452)		3,053		(42,399)
Issuance of common stock upon exercise of stock options	589,978	—		—	—		4,680		—		4,680
Issuance of restricted stock awards	4,137	—		—	—		—		—		—
Issuance of common stock for settlement of RSUs	386,894	—		—	—		—		—		—
Shares withheld related to the net share settlement	(140,325)	—		—	—		(2,611)		—		(2,611)
Conversion of common stock from Class B to Class A	2,702,492	—		(2,702,492)	—		—		—		—
Purchase of 2026 Capped Calls on 2026 Notes	—	—		—	—		(18,509)		—		(18,509)
Stock-based compensation	—	—		—	—		11,450		—		11,450
Net loss	—	—		—	—		—		(84,891)		(84,891)
Balance at March 31, 2021	73,018,687	$	1	20,476,782	$	—	$	862,673	$	(679,382)	$	183,292
Issuance of common stock upon exercise of stock options	446,032	—		—	—		3,111		—		3,111
Cancellation of restricted stock awards	(73,829)	—		—	—		—		—		—
Issuance of common stock for settlement of RSUs	517,686	—		—	—		—		—		—
Issuance of common stock for ESPP Purchase	52,227	—		—	—		730		—		730
Shared withheld related to the net share settlement	(170,698)	—		—	—		(3,981)		—		(3,981)
Conversion of common stock from Class B to Class A	1,741,362	—		(1,741,362)	—		—		—		—
Stock-based compensation	—	—		—	—		12,508		—		12,508
Net loss	—	—		—	—		—		(20,540)		(20,540)
Balance at June 30, 2021	75,531,467	$	1	18,735,420	$	—	$	875,041	$	(699,922)	$	175,120
Issuance of common stock upon exercise of stock options	285,502	—		—	—		2,460		—		2,460
Issuance of restricted stock awards	5,063	—		—	—		—		—		—
Issuance of common stock for settlement of RSUs	430,127	—		—	—		—		—		—

Shares withheld related to net share settlement	(155,573)	—		—	—		(2,767)		—		(2,767)
Conversion of common stock from Class B to Class A	4,469	—		(4,469)	—		—		—		—

Stock-based compensation	—	—		—	—		12,458		—		12,458
Net loss	—	—		—	—		—		(16,813)		(16,813)
Balance at September 30, 2021	76,101,055	$	1	18,730,951	$	—	$	887,192	$	(716,735)	$	170,458

(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,
	2022		2021
Cash flows from operating activities
Net loss	$	(59,397)	$	(122,244)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	11,059		14,492
Stock-based compensation expense	40,618		35,985
Amortization of debt discount and issuance costs	1,503		3,421
Loss on debt extinguishment	—		49,977
Payment in kind interest	—		2,178
Non-cash operating lease expenses	2,361		3,830
Amortization of creator signing fees	955		2,252
Adjustments related to creator advances, creator signing fees, and allowance for credit losses	(1,792)		2,762
Provision for chargebacks and refunds	10,909		2,253
Other	618		607
Changes in operating assets and liabilities:
Accounts receivable	(1,728)		(834)
Funds receivable	(8,328)		(8,396)
Creator signing fees and creator advances	2,930		4,525
Prepaid expenses and other assets	8,424		(11,048)
Accounts payable, creators	69,719		136,461
Accounts payable	(363)		(1,117)
Chargebacks and refunds reserve	(11,907)		(12,499)
Accrued compensation and benefits	387		5,232
Accrued taxes	(6,048)		1,162
Operating lease liabilities	(3,260)		(4,326)
Other accrued liabilities	(9,389)		20,528
Payment in kind interest	—		(8,962)
Net cash provided by operating activities	47,271		116,239
Cash flows from investing activities
Purchases of property and equipment	(1,254)		(516)
Capitalized internal-use software development costs	(2,305)		(1,142)
Cash paid for acquisitions	(1,125)		—
Net cash used in investing activities	(4,684)		(1,658)
Cash flows from financing activities
Proceeds from issuance of debt	—		212,750
Debt issuance costs	—		(5,738)
Purchase of convertible notes capped calls	—		(18,509)
Principal repayment of debt obligations and prepayment premium	—		(143,247)
Proceeds from exercise of stock options	3,027		10,250
Taxes paid related to net share settlement of equity awards	(5,338)		(9,359)
Proceeds from issuance of common stock under ESPP	790		730
Principal payments on finance lease obligations	(64)		(243)
Net cash (used in) provided by financing activities	(1,585)		46,634
Net increase in cash, cash equivalents and restricted cash	41,002		161,215
Cash, cash equivalents and restricted cash
Beginning of period	636,159		508,430
End of period	$	677,161	$	669,645
Supplemental cash flow data
Interest paid	$	5,486	$	5,678
Income taxes paid, net of refunds	234		155
Non-cash investing and financing activities

Reduction of right of use asset due to modification	2,163		—
(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 in-person and online live experiences. The Company’s platform integrates components needed to seamlessly plan, promote and produce live events. To further enhance the value of the creators’ self-service experience, the Company is working to reframe the Eventbrite product around the ongoing operational needs of creators in addition to the requirements of individual events. To this end, the Company has improved events calendaring, streamlined the event creation process and launched tools to assist creators in promoting multiple events and increasing audience size for their events.

Impact of COVID-19 and Macroeconomic Conditions on our Business

The Company continues to be significantly impacted by the COVID-19 pandemic. The full extent and duration of the impact of the COVID-19 pandemic on the Company’s business, results of operations and financial condition remain uncertain and dependent on future developments that cannot be accurately predicted at this time, such as the introduction and spread of new variants or mutant strains of the virus, the continuation of existing or implementation of new government restrictions, and the extent of containment actions taken on event gatherings in general, and the impact of these and other factors on the Company’s business in particular, which may result in a reduction in events and an increase in event cancellation losses. The effect of and uncertainties surrounding the COVID-19 pandemic have caused the Company to make significant estimates in its consolidated financial statements as of and for the three and nine months ended September 30, 2022, specifically related to chargebacks and refunds due to cancelled or postponed events, which impact 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. Significant uncertainty remains regarding the extent and duration of the impact that the COVID-19 pandemic will have on the Company’s business, and the impact of COVID-19 may persist for an extended period of time or become more pronounced.

Furthermore, as a result of economic pressures, including inflation, labor challenges, rising interest rates, economic recession and other factors, creators may scale back events which could materially and adversely affect our paid ticket volume, and consequently our net revenue and financial results.

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 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, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 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, 2021 (2021 Form 10-K).

Significant Accounting Policies

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There have been no changes to our significant accounting policies described in our 2021 Form 10-K that have had a material impact on our unaudited condensed consolidated financial statements and related notes.

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, chargebacks and refunds reserve, certain assumptions used in the valuation of equity awards, assumptions used in determining the fair value of business combinations, the allowance for credit losses, and indirect tax reserves. 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.

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 reportable segment.

2. Revenue Recognition

The Company derives its revenues primarily from ticketing and payment processing. The Company also derives a smaller portion of revenues from marketing services. The Company's customers are event creators who use the Company's platform to sell tickets and market events 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.

Transaction Revenue

For ticketing services, the Company's service provides a platform to the event creator and attendee to transact. The Company's performance obligation is to facilitate and process that transaction and issue the ticket, and revenue is recognized by the Company when the ticket is sold. The amount that the Company earns for its services is fixed which typically consists of a flat fee and a percentage based fee per ticket. As a result, the Company records revenue on a net basis related to its ticketing service fees.

For payment processing services, the Company's service provides the event creator with 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. For EPP services, 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 in establishing the price of its service. As a result, the Company records revenue on a gross basis related to its EPP service fees. Costs incurred for processing the ticketing transactions are included in cost of net revenues in the consolidated statements of operations. Under the FPP option, the Company is not responsible for processing the transaction or collecting the face value of the ticket and associated fees. In this case, the Company records revenue on a net basis related to its FPP service fees.

Revenue is presented net of indirect taxes, customer refunds, payment chargebacks, estimated uncollectible amounts, creator royalties, and amortization of creator signing fees. Previously, the Company offered upfront payments to creators entering into new or renewed ticketing arrangements. However, the Company is shifting from upfront payment incentives to performance based incentives on a limited basis.

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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.

Marketing Revenue

Revenue from marketing services is derived from providing creators with access to various marketing tools and functionalities for a monthly subscription fee. The Company considers that it satisfies its performance obligation as it provides the services to customers and recognizes revenue ratably over the service term which varies from one month to a year.

3. Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents includes bank deposits and money market funds held with financial institutions with an original maturity of three months or less at the date of purchase.

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 $330.6 million and $268.6 million as of September 30, 2022 and December 31, 2021, respectively. Creator cash is legally unrestricted, and while generally the Company has not utilized creator cash for its own financing or investing activities in the past, the Company may invest a portion of creator cash in short-term investments in future periods. These amounts due to creators are included in accounts payable, creators on the consolidated balance sheets. See Note 8, "Accounts Payable, Creators", for more details.

The Company has issued letters of credit relating to contracts entered into with other parties 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, 2022		December 31, 2021		September 30, 2021
Cash and cash equivalents	$	675,817	$	634,378	$	667,868
Restricted cash	1,344		1,781		1,777
Total cash, cash equivalents and restricted cash	$	677,161	$	636,159	$	669,645

4. 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 $24.3 million and $16.7 million as of September 30, 2022 and December 31, 2021, respectively.

5. 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. In evaluating the Company’s ability to collect outstanding receivable balances, the Company considers various factors including the age of the balance, the creditworthiness of the customer and the customer’s current financial condition. Accounts receivable deemed uncollectible are charged against the allowance for credit losses when identified. The following table summarizes the Company’s accounts receivable balance (in thousands):


	September 30, 2022		December 31, 2021
Accounts receivable, customers	$	2,866	$	2,085
Allowance for credit losses	(857)		(975)
Accounts receivable, net	$	2,009	$	1,110

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6. Creator Signing Fees, Net

Creator signing fees are incentives that are offered and paid by the Company to secure exclusive ticketing and payment processing rights with certain creators. 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 creators and accordingly the amortization of these fees is recorded as a reduction of revenue in the consolidated statements of operations.

As of September 30, 2022, the balance of creator signing fees, net is being amortized over a weighted-average remaining contract life of 3.4 years on a straight-line basis. The following table summarizes the activity in creator signing fees for the periods indicated (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Balance, beginning of period	$	2,538	$	5,523	$	3,409	$	9,495
Creator signing fees paid	—		—		5		18
Amortization of creator signing fees	(281)		(652)		(955)		(2,252)
Write-offs and other adjustments	(75)		(515)		(277)		(2,905)
Balance, end of period	$	2,182	$	4,356	$	2,182	$	4,356

Creator signing fees are classified as follows on the condensed consolidated balance sheet as of the dates indicated (in thousands):


	September 30, 2022		September 30, 2021
Creator signing fees, net	$	929	$	1,739
Creator signing fees, noncurrent	1,253		2,617
Total creator signing fees	$	2,182	$	4,356

7. Creator Advances, Net

Creator advances are incentives that are offered by the Company which provide the creator with funds in advance of the event. These are subsequently recovered by withholding amounts due to the Company from the sale of tickets for the event until the creator payment has been fully recovered.

The following table summarizes the activity in creator advances for the periods indicated (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Balance, beginning of period	$	1,150	$	3,670	$	862	$	6,651
Creator advances paid	—		—		335		75
Creator advances recouped	(325)		(1,488)		(2,247)		(3,448)
Write-offs and other adjustments	—		—		1,875		(1,096)
Balance, end of period	$	825	$	2,182	$	825	$	2,182

8. 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 a portion of these proceeds prior to completion of their events.

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 of September 30, 2022 and December 31, 2021, advance payouts outstanding was approximately $394.0 million and $319.3 million, respectively.

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9. Chargebacks and Refunds Reserve

The terms of the Company's standard merchant agreement obligate creators to reimburse attendees who are entitled to refunds. The Company records estimates for refunds and chargebacks of its fees as contra-revenue. 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. See Note 8, “Accounts Payable, Creators”. 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 reserves for estimated advance payout losses 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 nature of future events, the remaining time to event date, macro-economic conditions and current events, and actual chargeback and refund activity during the current year. The chargebacks and refunds reserve was $20.4 million and $21.4 million which primarily includes reserve balances for estimated advance payout losses of $18.2 million and $18.5 million as of September 30, 2022 and December 31, 2021, respectively.

Due to the nature of the COVID-19 situation and the limited amount of currently available data, there is a high degree of uncertainty around the outcome of events that are currently postponed or rescheduled and the remaining advance payouts balance. It is possible that this amount will not be sufficient and the Company's actual losses could be materially different from its current estimates. The Company will adjust reserves in the future to reflect best estimates of future outcomes. The Company cannot predict the outcome of or estimate the possible recovery or range of recovery from these matters.

10. Property and Equipment, Net

Property and equipment, net consisted of the following as of the dates indicated (in thousands):


	September 30, 2022		December 31, 2021
Capitalized internal-use software development costs	$	54,113	$	51,292
Furniture and fixtures	893		1,298
Computers and computer equipment	7,971		6,854
Leasehold improvements	4,809		4,841
Finance lease right-of-use assets	605		605
Property and equipment	68,391		64,890
Less: Accumulated depreciation and amortization	(61,416)		(57,728)
Property and equipment, net	$	6,975	$	7,162

The Company recorded the following amounts related to depreciation of fixed assets and capitalized internal-use software development costs during the periods indicated (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Depreciation expense	$	704	$	373	$	1,475	$	1,550
Amortization of capitalized internal-use software development costs	822		1,235		2,657		4,555

11. Leases

Operating Leases

The Company has operating leases primarily for office space. Operating lease right-of-use assets and operating lease liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. Right-of-use assets also include adjustments related to prepaid or deferred lease payments and lease incentives. In calculating the present value of the lease payments, the Company utilizes its incremental borrowing rate, as the rates implicit in the leases were not readily determinable. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located.

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The Company subleases certain leased office space to third parties when it determines there is excess leased capacity. Sublease income is recorded as a reduction of operating expenses.

The components of operating lease costs were as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Operating lease costs	$	798	$	646	$	2,361	$	3,830
Sublease income	(48)		(57)		(154)		(1,372)
Total operating lease costs, net	$	750	$	589	$	2,207	$	2,458

As of September 30, 2022, the Company's operating leases had a weighted-average remaining lease term of 2.7 years and a weighted-average discount rate of 3.4%.

As of September 30, 2022, maturities of operating lease liabilities were as follows (in thousands):


	Operating Leases
The remainder of 2022	$	1,072
2023	3,033
2024	1,653
2025	1,696
2026	141
Thereafter	—
Total future operating lease payments	7,595

Less: Imputed interest	(433)
Total operating lease liabilities	$	7,162
Reconciliation of lease liabilities as shown in the consolidated balance sheets
Operating lease liabilities, current	$	3,473
Operating lease liabilities, noncurrent	3,689
Total operating lease liabilities	$	7,162

12. Goodwill and Acquired Intangible Assets, Net

The carrying amounts of the Company's goodwill was $174.4 million as of September 30, 2022 and December 31, 2021. The Company tests goodwill for impairment at least annually, in the fourth quarter, or whenever events or changes in circumstances would more likely than not reduce the fair value of its single reporting unit below its carrying value. We did not record any goodwill impairment during the nine months ended September 30, 2022.

Acquired intangible assets consisted of the following (in thousands):


	September 30, 2022						December 31, 2021
	Cost		Accumulated Amortization		Net Book Value		Cost		Accumulated Amortization		Net Book Value
Developed technology	$	22,396	$	20,646	$	1,750	$	22,396	$	20,029	$	2,367
Customer relationships	74,884		52,448		22,436		74,884		46,157		28,727
Tradenames	1,650		1,647		3		1,650		1,628		22
Acquired intangible assets, net	$	98,930	$	74,741	$	24,189	$	98,930	$	67,814	$	31,116

The following tables set forth the amortization expense recorded related to acquired intangible assets for the three and nine months ended September 30, 2022 and 2021 (in thousands):

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	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Cost of net revenue	$	208	$	208	$	617	$	617
Sales, marketing and support	2,071		2,606		6,291		7,751
General and administrative	6		6		19		19
Total amortization of acquired intangible assets	$	2,285	$	2,820	$	6,927	$	8,387

As of September 30, 2022, the total expected future amortization expense of acquired intangible assets by year is as follows (in thousands):


The remainder of 2022	2,282
2023	8,593
2024	8,300
2025	5,014
2026	—
Thereafter	—
Total expected future amortization expense	$	24,189

13. 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 and other current liabilities approximate their fair value. All of these financial assets and liabilities are Level 1, except for debt. See Note 14, “Debt”, for details regarding the fair value of the Company's convertible senior notes.

14. Debt

As of September 30, 2022 and December 31, 2021, long-term debt consisted of the following (in thousands):


	September 30, 2022						December 31, 2021
	2026 Notes		2025 Notes		Total		2026 Notes		2025 Notes		Total
Outstanding principal balance	$	212,750	$	150,000	$	362,750	$	212,750	$	150,000	$	362,750
Less: Debt issuance costs	(4,157)		(3,526)		(7,683)		(4,915)		(4,271)		(9,186)
Carrying amount, long-term debt	$	208,593	$	146,474	$	355,067	$	207,835	$	145,729	$	353,564

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The following tables set forth the total interest expense recognized related to the term loans and the convertible notes for the three and nine months ended September 30, 2022 and 2021 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Cash interest expense	$	2,274	$	2,274	$	6,801	$	7,511
Payment in kind interest	—		—		—		2,178
Amortization of debt discount	—		—		—		1,750
Amortization of debt issuance costs	529		511		1,504		1,671
Total interest expense	$	2,803	$	2,785	$	8,305	$	13,110

The following table summarizes the Company's contractual obligation to settle commitments related to the 2026 Notes and 2025 Notes as of September 30, 2022 (in thousands):


	Payments due by Year
	Total		2022		2023		2024		2025		2026		Thereafter
Convertible Senior Notes Due 2026	$	212,750	$	—	$	—	$	—	$	—	$	212,750	$	—
Interest obligations on 2026 Notes (1)	6,384		—		1,596		1,596		1,596		1,596		—
Convertible Senior Notes Due 2025	150,000		—		—		—		150,000		—		—
Interest obligations on 2025 Notes (1)	26,250		3,750		7,500		7,500		7,500		—		—

(1) The 2026 Notes and 2025 Notes bear interest at a fixed rate of 0.750% and 5.000% per year, respectively.

Senior Notes

2025 Notes

In June 2020, the Company issued $150.0 million aggregate principal amount of 5.000% convertible senior notes due 2025 (the 2025 Notes), in a private offering to qualified institutional buyers. Interest is payable in cash semi-annually in arrears on June 1 and December 1 of each year. The 2025 Notes mature on December 1, 2025, unless earlier repurchased, redeemed or converted. The total net proceeds from the 2025 Notes, after deducting the debt issuance costs of $5.7 million, was $144.3 million.

Prior to the adoption of ASU 2020-06, the Company separated the conversion option of the 2025 Notes from the debt instrument and classified the conversion option in equity. The Company early adopted ASU 2020-06 on January 1, 2021 using the modified retrospective transition method. Adoption of ASU 2020-06 resulted in a decrease to additional paid-in capital of $45.5 million, an increase to retained earnings of $3.1 million, and a net increase to long-term debt of $42.4 million.

The effective interest rate of the 2025 Notes is 5.8%. The Company recorded cash interest of $5.6 million, and amortization of debt issuance costs of $0.7 million during the nine months ended September 30, 2022 and September 30, 2021.

The 2025 Notes are (i) equal in right of payment with the Company’s existing and future senior, unsecured indebtedness; (ii) senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated to the 2025 Notes; (iii) effectively subordinated to the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries.

The terms of the 2025 Notes are governed by an Indenture by and between the Company and Wilmington Trust, National Association, as Trustee (the Indenture). The Company may irrevocably elect a settlement in cash, shares of Class A common stock, or a combination of cash and shares of Class A common stock.

The 2025 Notes are convertible at an initial conversion rate of 79.3903 shares of Class A common stock per $1,000 principal amount of 2025 Notes, which is equal to an initial conversion price of approximately $12.60 per share of Class A common stock. The conversion rate is subject to adjustment under certain circumstances in accordance with the terms of the Indenture. Holders of the 2025 Notes may convert all or a portion of their 2025 Notes only in multiples of $1,000 principal amount, under the following circumstances:

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•during any calendar quarter commencing after the calendar quarter ending on September 30, 2020 (and only during such calendar quarter), if the last reported sale price per share of our Class A common stock exceeds 130% of the conversion price of the 2025 Notes for each of the at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

•during the five consecutive business days immediately after any 10 consecutive trading day period in which the trading price per $1,000 principal amount of 2025 Notes for each trading day of that 10 consecutive trading day period was less than 98% of the product of the last reported sale price of Class A common stock and the conversion rate on such trading day;

•upon the occurrence of certain corporate events or distributions on the Company's Class A common stock, as described in the Indenture;

•if the Company calls the 2025 Notes for redemption; or

•at any time from, and including, June 2, 2025 until the close of business on the second scheduled trading day immediately before the maturity date.

Holders of the 2025 Notes who convert their 2025 Notes in connection with certain corporate events that constitute a make-whole fundamental change (as defined in the Indenture) are, under certain circumstances, entitled to an increase in the conversion rate.

No sinking fund is provided for the 2025 Notes. The 2025 Notes are redeemable, in whole or in part, at the Company's option at any time and from time to time, on or after June 1, 2023 and on or before the 40th scheduled trading day immediately prior to the maturity date, at a cash redemption price equal to the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of Class A common stock exceeds 130% of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading dates ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (2) the trading day immediately before the date the Company sends such notice. Additionally, calling any of the 2025 Notes for redemption will constitute a make-whole fundamental change with respect to that portion of the 2025 Notes, in which case the conversion rate applicable to the conversion of those 2025 Notes will be increased in certain circumstances (as described in the Indenture) if it is converted after it is called for redemption.

If certain corporate events that constitute a “Fundamental Change” (as defined in the Indenture) occur, then, subject to a limited exception for certain cash mergers, note holders may require the Company to repurchase their 2025 Notes at a cash repurchase price equal to the principal amount of the 2025 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the Fundamental Change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s Class A common stock.

The 2025 Notes have customary provisions relating to the occurrence of “Events of Default” (as defined in the Indenture), which include the following: (i) certain payment defaults on the 2025 Notes; (ii) the Company’s failure to send certain notices under the Indenture within specified periods of time; (iii) the Company’s failure to comply with certain covenants in the Indenture relating to the Company’s ability to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to another person; (iv) a default by the Company in its other obligations or agreements under the Indenture or the 2025 Notes if such default is not cured or waived within 60 days after notice is given in accordance with the Indenture; (v) the rendering of certain judgments against the Company or any of its subsidiaries for the payment of at least $10,000,000, where such judgments are not discharged or stayed within 45 days after the date on which the right to appeal has expired or on which all rights to appeal have been extinguished; (vi) certain defaults by the Company or any of its significant subsidiaries with respect to indebtedness for borrowed money of at least $10,000,000; and (vii) certain events of bankruptcy, insolvency and reorganization involving the Company or any of the Company’s significant subsidiaries.

If an Event of Default involving bankruptcy, insolvency or reorganization events with respect to the Company (and not solely with respect to a significant subsidiary of the Company) occurs, then the principal amount of, and all accrued and unpaid interest on, all of the 2025 Notes then outstanding will immediately become due and payable without any further action or notice by any person. If any other Event of Default occurs and is continuing, then, the Trustee, by notice to the Company, or noteholders of at least 25% of the aggregate principal amount of 2025 Notes then outstanding, by notice to the Company and the Trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the 2025 Notes then outstanding to become due and payable immediately. However, notwithstanding the foregoing, the Company may elect, at its option, that the sole remedy for an Event of Default relating to certain failures by the Company to comply with certain reporting covenants

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in the Indenture consists exclusively of the right of the noteholders to receive special interest on the 2025 Notes for up to 180 days at a specified rate per annum not exceeding 0.50% on the principal amount of the 2025 Notes.

The fair value of the 2025 Notes, which we have classified as a Level 2 instrument, was $140.7 million as of September 30, 2022. The fair value of the 2025 Notes is determined using observable market prices on the last business day of the period.

2026 Notes

In March 2021, the Company issued $212.75 million aggregate principal amount of 0.750% convertible senior notes due 2026 (the 2026 Notes) in a private offering to qualified institutional buyers, inclusive of the initial purchaser's exercise in full of its option to purchase additional notes. The 2026 Notes bear interest at a fixed rate of 0.750% per year. Interest is payable in cash semi-annually in arrears on March 15 and September 15 of each year. The 2026 Notes mature on September 15, 2026 unless earlier repurchased, redeemed or converted. The total net proceeds from the 2026 Notes, after deducting debt issuance costs of $5.7 million, was $207.0 million.

The 2026 Notes are the Company’s senior, unsecured obligations and are (i) equal in right of payment with the Company’s existing and future senior, unsecured indebtedness; (ii) senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated to the 2026 Notes and effectively subordinated to the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iii) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries.

Before March 15, 2026, noteholders will have the right to convert their 2026 Notes under the following circumstances:

•during any calendar quarter commencing after the calendar quarter ending on June 30, 2021 (and only during such calendar quarter), if the last reported sale price per share of our Class A common stock exceeds 130% of the conversion price for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

•during the five consecutive business days immediately after any 10 consecutive trading day period in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our Class A common stock on such trading day and the conversion rate on such trading day;

•upon the occurrence of certain corporate events or distributions on our Class A common stock, as described in the Indenture and

•if the Company call such notes for redemption;

From and after March 15, 2026, noteholders may convert their 2026 Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. Upon conversion, the 2026 Notes may be settled in cash, shares of Class A common stock, or a combination of cash and shares of Class A common stock, at the Company's election. The Company may irrevocably elect a settlement in cash, shares of Class A common stock, or a combination of cash and shares of Class A common stock.

The 2026 Notes are convertible at an initial conversion rate of 35.8616 shares of Class A common stock per $1,000 principal amount of 2026 Notes, which is equal to an initial conversion price of approximately $27.89 per share of Class A common stock. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time.

No sinking fund is provided for the 2026 Notes. The 2026 Notes will be redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after March 15, 2024 and on or before the 40th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest, if any, but only if the last reported sale price per share of the Company’s Class A common stock exceeds 130% of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (2) the trading day immediately before the date the Company sends such notice. In addition, calling any 2026 Note for redemption will constitute a Make-Whole Fundamental Change with respect to that Note, in which case the conversion rate applicable to the conversion of that 2026 Note will be increased in certain circumstances if it is converted after it is called for redemption.

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If certain corporate events that constitute a “Fundamental Change” (as defined in the Indenture) occur, then, subject to a limited exception for certain cash mergers, noteholders may require the Company to repurchase their 2026 Notes at a cash repurchase price equal to the principal amount of the 2026 Notes to be repurchased, plus accrued and unpaid interest, if any. The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s Class A common stock.

The 2026 Notes have customary provisions relating to the occurrence of “Events of Default” (as defined in the Indenture), which include the following: (i) certain payment defaults on the Notes (which, in the case of a default in the payment of interest on the Notes, will be subject to a 30-day cure period); (ii) the Company’s failure to send certain notices under the Indenture within specified periods of time; (iii) the Company’s failure to comply with certain covenants in the Indenture relating to the Company’s ability to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to another person; (iv) a default by the Company in its other obligations or agreements under the Indenture or the Notes if such default is not cured or waived within 60 days after notice is given in accordance with the Indenture; (v) certain defaults by the Company or any of its significant subsidiaries with respect to indebtedness for borrowed money of at least $10,000,000; and (vi) certain events of bankruptcy, insolvency and reorganization involving the Company or any of the Company’s significant subsidiaries.

If an Event of Default involving bankruptcy, insolvency or reorganization events with respect to the Company (and not solely with respect to a significant subsidiary of the Company) occurs, then the principal amount of, and all accrued and unpaid interest on, all of the 2026 Notes then outstanding will immediately become due and payable without any further action or notice by any person. If any other Event of Default occurs and is continuing, then the Trustee, by notice to the Company, or noteholders of at least 25% of the aggregate principal amount of Notes then outstanding, by notice to the Company and the Trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the 2026 Notes then outstanding to become due and payable immediately. However, notwithstanding the foregoing, the Company may elect, at its option, that the sole remedy for an Event of Default relating to certain failures by the Company to comply with certain reporting covenants in the Indenture consists exclusively of the right of the noteholders to receive special interest on the 2026 Notes for up to 180 days at a specified rate per annum not exceeding 0.50% on the principal amount of the 2026 Notes.

In accounting for the issuance of the 2026 Notes, total issuance costs of $5.7 million related to the 2026 Notes are being amortized to interest expense over the term of the 2026 Notes using the effective interest rate method.

The effective interest rate of the 2026 Notes is 1.3%. During the nine months ended September 30, 2022, the Company recorded cash interest of $1.2 million, and amortization of debt issuance costs of $0.8 million. During the nine months ended September 30, 2021, the Company recorded cash interest of $0.9 million, and amortization of debt discount and issuance costs of $0.6 million.

The fair value of the 2026 Notes, which we have classified as a Level 2 instrument, was $148.7 million as of September 30, 2022. The fair value of the 2026 Notes is determined using observable market prices on the last business day of the period.

Capped Call Transactions

In March 2021, in connection with the offering of the 2026 Notes, the Company entered into privately negotiated capped call transactions (2026 Capped Calls) with certain financial institutions (2026 Option Counterparties). The 2026 Capped Calls cover, subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the 2026 Notes, the number of shares of Class A common stock initially underlying the 2026 Notes. The 2026 Capped Calls are expected generally to reduce potential dilution to the Class A common stock upon any conversion of 2026 Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of such converted 2026 Notes, as the case may be, with such reduction and/or offset subject to a cap. The cap price of the 2026 Capped Calls will initially be $37.5375 per share of Class A common stock, and is subject to certain customary adjustments under the terms of the 2026 Capped Calls. The 2026 Capped Calls will expire in September 2026, if not exercised earlier.

The 2026 Capped Calls are separate transactions entered into by the Company with each 2026 Option Counterparty, and are not part of the terms of the 2026 Notes and will not affect any noteholder’s rights under the 2026 Notes. Noteholders will not have any rights with respect to the 2026 Capped Calls.

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The 2026 Capped Calls are subject to adjustment upon the occurrence of specified extraordinary events affecting the company, including merger events, tender offers and announcement events. In addition, the 2026 Capped Calls are subject to certain specified additional disruption events that may give rise to a termination of the 2026 Capped Calls, including nationalization, insolvency or delisting, changes in law, failures to deliver, insolvency filings and hedging disruptions.

The 2026 Capped Call Transactions do not meet the criteria for separate accounting as a derivative. The aggregate premium paid for the purchase of the 2026 Capped Calls of $18.5 million was recorded as a reduction to additional paid-in capital on the consolidated balance sheets.

In June 2020, in connection with the offering of the 2025 Notes, the Company entered privately negotiated capped call transactions with certain financial institutions (2025 Capped Calls). The 2025 Capped Calls have an initial strike price of approximately $12.60 per share, which corresponds to the initial conversion price of the 2025 Notes. The 2025 Capped Calls cover, subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the 2025 Notes, the number of shares of Class A common stock initially underlying the 2025 Notes. The 2025 Capped Calls are expected generally to reduce potential dilution to the Company’s Class A common stock upon any conversion of the 2025 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2025 Notes, as the case may be, with such reduction and/or offset subject to a cap, initially equal to $17.1520, and is subject to certain adjustments under the terms of the 2025 Capped Call transactions. The 2025 Capped Calls will expire in December 2025, if not exercised earlier.

The 2025 Capped Calls are subject to adjustment upon the occurrence of specified extraordinary events affecting the company, including merger events, tender offers and announcement events. In addition, the 2025 Capped Calls are subject to certain specified additional disruption events that may give rise to a termination of the 2025 Capped Calls, including nationalization, insolvency or delisting, changes in law, failures to deliver, insolvency filings and hedging disruptions. For accounting purposes, the 2025 Capped Calls are separate transactions, and not part of the terms of the Notes.

The 2025 Capped Call Transactions do not meet the criteria for separate accounting as a derivative. The aggregate premium paid for the purchase of the 2025 Capped Calls of $15.6 million was recorded as a reduction to additional paid-in capital on the consolidated balance sheets.

Term Loans

On March 11, 2021, the Company repaid all borrowings outstanding under the Credit Agreement, dated as of May 9, 2020 (and as amended on June 15, 2020), by and among the Company, FP EB Aggregator, L.P. (FP) and Wilmington Trust, National Association, as the administrative agent (the May 2020 credit agreement), and subsequently terminated the May 2020 credit agreement. In connection with the early termination of the borrowings outstanding under the May 2020 credit agreement, the Company paid $153.2 million, which consisted of $125.0 million in principal payments, a $18.2 million make-whole premium, $9.0 million payment in kind interest and $1.0 million of accrued cash interest.

The Company recorded a loss on debt extinguishment of $50.0 million during nine months ended September 30, 2021. The loss primarily related to the write-off of unamortized debt discount and issuance costs of $31.8 million and a $18.2 million make-whole premium.

During the nine months ended September 30, 2021, the Company recorded $2.2 million payment in kind interest, $2.2 million amortization of debt discount and issuance costs, and $1.0 million cash interest.

15. Commitments and Contingencies

The Company's principal commitments consist of obligations under the 2025 Notes and 2026 Notes (including principal and coupon interest), operating leases for office space, as well as non-cancellable purchase commitments. See Note 14, "Debt" and Note 11 "Leases" for contractual obligations to settle commitments relating to the 2025 Notes, 2026 Notes and operating leases for office space.

During the nine months ended September 30, 2022, the Company entered into a purchase commitment with a third-party payment services provider. The Company plans to use the provider’s onboarding service for its creators, and other potential services, which are expected to streamline the Company’s payment infrastructure. The fees for this service will depend on certain volume and territory based rates. The Company expects to commence services by April 1, 2023. As of September 30, 2022, the Company's contractual obligation to settle the minimum fee commitment related to these services is $4.5 million, which is expected to be paid based on usage over a three year term ending March 31, 2026.

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Other than as described above, there were no material changes outside the Company's normal course of business in its commitments under contractual obligations from those disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Litigation and Loss Contingencies

In addition to the litigation discussed below, from time to time, the Company may become a party to litigation and subject to claims incident to the ordinary course of business, including intellectual property claims, labor and employment claims, breach of contract claims, tax and other matters. Future litigation may be necessary to defend the Company or its creators.

The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.

The Company accrues estimates for resolution of legal and other contingencies when losses are probable and reasonably estimable. The Company's assessment of losses is re-evaluated each accounting period and is based on all available information, including impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to each case. Nevertheless, it is possible that additional future legal costs including settlements, judgments, legal fees and other related defense costs could have a material adverse effect on the Company’s business, consolidated financial position, results of operations or liquidity.

The matters discussed below summarize the Company’s current ongoing pending litigation.

Refund Policy Arbitration

On June 4, 2020, three plaintiffs, seeking to represent a proposed class of individuals who purchased tickets on or after June 3, 2016, filed suit against the Company in the United States District Court for the Northern District of California, in a case captioned Snow, et al. v. Eventbrite, Inc., Case No. 20-cv-03698 (the Class Action). Plaintiffs allege that Eventbrite failed to provide an opportunity for purchasers of tickets to events sold through Eventbrite’s platform to obtain a refund where the event is postponed, rescheduled, or canceled. Plaintiffs seek injunctive relief in addition to restitution and monetary damages under California’s Consumer Legal Remedies Act, False Advertising Law, and Unfair Competition Law, in addition to claims brought under California common law. The Company denies the allegations and intends to defend the case vigorously. Prior to answering Plaintiffs’ complaint, Eventbrite brought a motion to compel arbitration pursuant to its Terms of Service. The Court denied that motion. The Company thereafter answered Plaintiffs’ Complaint and brought a second motion to compel arbitration, based in part on facts established via the Company’s Answer. The Court granted that motion on September 2, 2021, and stayed the suit pending the results of arbitration. Two of the named Plaintiffs have since initiated individual arbitrations pursuant to the Company’s Terms of Service. The Company has filed responses to Plaintiffs’ demands for arbitration, denying any and all liability. The cases are in their early stages. The Company is unable to predict the likely outcome at this point.

Securities Litigation

Beginning on April 15, 2019, purported stockholders of the Company filed two putative securities class action complaints in the United States District Court for the Northern District of California, and three putative securities class action complaints in the Superior Court of California for the County of San Mateo, against the Company, certain of its executives and directors, and its underwriters for the Company's initial public offering (IPO). Some of these actions also name as defendants venture capital firms that were investors in the Company as of the IPO.

On August 22, 2019, the federal court consolidated the two pending actions (the Federal Action). On October 11, 2019, the lead plaintiffs in the Federal Action filed an amended consolidated complaint. That complaint alleged that the Company misrepresented and/or omitted material information in its IPO offering documents in violation of the Securities Act. It also challenged public statements made after the IPO in violation of the Exchange Act. The amended complaint sought unspecified monetary damages and other relief on behalf of investors. On December 11, 2019, the defendants filed a motion to dismiss the amended complaint. On April 28, 2020, the court granted defendants’ motion to dismiss in its entirety with leave to amend and set a deadline of June 24, 2020 for lead plaintiffs to file their second amended consolidated complaint. On June 22, 2020, the Court extended lead plaintiffs' deadline to file their second amended consolidated complaint to August 10, 2020.

On July 29, 2020, the Company entered into a settlement agreement with the lead plaintiffs in the Federal Action. On August 27, 2020, the lead plaintiffs in the Federal Action filed a motion for preliminary approval of the settlement. On October 30, 2020, the Court issued an order continuing the preliminary approval hearing. On January 22, 2021, the Court issued an order denying without prejudice the motion for preliminary approval. On February 9, 2021, the Company gave notice to the

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lead plaintiff that, in light of the denial of the preliminary approval motion, it was terminating the settlement agreement. On June 27, 2022, the Court dismissed the Federal Action with prejudice. Plaintiffs deadline to file an appeal with respect to this dismissal was July 27, 2022, and no such appeal was filed.

On June 24, 2019, the state court consolidated two state actions pending at that time (the State Action). On July 24, 2019, the two plaintiffs in the State Action filed a consolidated complaint. The consolidated complaint generally alleged that the Company misrepresented and/or omitted material information in its IPO offering documents, in violation of the Securities Act, and sought unspecified monetary damages and other relief on behalf of investors. On August 23, 2019, defendants filed demurrers to the consolidated complaint, which the court sustained with leave to amend at a hearing on November 1, 2019. Plaintiffs filed a first amended consolidated complaint (FAC) on February 10, 2020. Defendants filed demurrers to the FAC on March 26, 2020. On June 23, 2020, the court sustained the demurrers with leave to amend. On November 9, 2020, the plaintiffs filed their second amended consolidated complaint (SAC). On November 20, 2020, defendants filed demurrers to the SAC, which were overruled on December 17, 2020. On January 15, 2021, defendants filed their answers to the SAC. On January 22, 2021, the plaintiffs filed a motion for class certification. On February 17, 2021, the Court entered a class certification order.

On October 26, 2021, the Company entered into a binding settlement agreement with the plaintiffs in the State Action. In connection with the settlement, the Company and its insurers have paid $19.3 million.

The settlement was preliminarily approved on November 5, 2021, and, on June 10, 2022, the Court entered judgment and ordered final approval of the settlement. The deadline to file an appeal in connection with the judgment and order of final settlement approval was August 9, 2022, and no such appeal was filed.

Commercial Contract Litigation

On June 18, 2020, the Company filed a Complaint in the United States District Court for the Northern District of California against M.R.G. Concerts Ltd. (MRG) and Matthew Gibbons (Gibbons), asserting claims for breach of contract, breach of the implied covenant of good faith and fair dealing, declaratory judgment, unfair competition, and common counts under California law, arising out of MRG and Gibbons’s termination of certain contracts with the Company and their refusal to make various payments to the Company required by those contracts. MRG asserted counterclaims against the Company for breach of one of the contracts in issue, as well as for breach of the implied covenant of good faith and fair dealing, unfair competition, and declaratory judgment. A jury trial commenced on May 16, 2022. On May 23, 2022, the jury issued a verdict in Eventbrite’s favor and awarded the Company $11.0 million in damages. MRG filed a motion seeking to reduce the verdict or hold a new trial, and the Company filed a motion for pre-judgment and post-judgment interest as well as to recover its attorneys’ fees and costs of suit per the parties’ contracts. On November 1, 2022, the Court denied MRG’s motion, and granted the Company’s motion. MRG’s deadline to file any appeal has not yet lapsed. The Company cannot predict whether MRG will seek to appeal, or the likelihood of success should MRG do so. The Company has not recorded any gain in relation to this verdict for the nine months ended September 30, 2022.

Tax Matters

The Company is currently under audit in certain jurisdictions with regard to indirect tax matters. The Company establishes reserves for indirect tax matters when it determines that the likelihood of a loss is probable, and the loss is reasonably estimable. Accordingly, the Company has established a reserve for the potential settlement of issues related to sales and other indirect taxes in the amount of $6.8 million and $11.1 million as of September 30, 2022 and December 31, 2021, respectively. These amounts, which represent management’s best estimates of its potential liability, include potential interest and penalties of $1.9 million and $2.2 million as of September 30, 2022 and December 31, 2021, respectively.

The Company does not believe that any ultimate liability resulting from any of these matters will have a material adverse effect on its business, consolidated financial position, results of operations or liquidity. However, the outcome of these matters is inherently uncertain. Therefore, if one or more of these matters were resolved against the Company for amounts in excess of management’s expectations, the Company’s financial statements, including in a particular reporting period in which any such outcome becomes probable and estimable, could be materially adversely affected.

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Indemnification

In the ordinary course of business, the Company enters into contractual arrangements under which the Company agrees to provide indemnification of varying scope and terms to business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, intellectual property infringement claims made by third parties, and other liabilities relating to or arising from the Company’s online ticketing platform or the Company’s acts or omissions. In these circumstances, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract. Further, the Company’s obligations under these agreements may be limited in terms of time and/or amount, and in some instances, the Company may have recourse against third parties for certain payments. In addition, the Company has indemnification agreements with its directors and executive officers that require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The terms of such obligations vary.

16. Stockholders' Equity

Equity Incentive Plans

In August 2018, the 2018 Stock Option and Incentive Plan (2018 Plan) was adopted by the board of directors and approved by the stockholders and became effective in connection with the IPO. The 2018 Plan replaced the 2010 Stock Plan (2010 Plan) as the board of directors determined not to make additional awards under the 2010 Plan. The 2010 Plan will continue to govern outstanding equity awards granted thereunder.

The 2018 Plan allows for the granting of options, stock appreciation rights, restricted stock, restricted stock units (RSUs), unrestricted stock awards, performance-based restricted stock units (PSUs), dividend equivalent rights and cash-based awards. Every January 1, the number of shares of stock reserved and available for issuance under the 2018 Plan will cumulatively increase by five percent of the number of shares of Class A and Class B common stock outstanding on the immediately preceding December 31, or a lesser number of shares as approved by the board of directors.

As of September 30, 2022, there were 6,004,641 and 6,637,862 options issued and outstanding under the 2010 Plan and 2018 Plan, respectively (collectively, the Plans). As of September 30, 2022, 5,365,832 shares of Class A common stock and were available for grant under the 2018 Plan.

Stock options granted typically vest over a four-year period from the date of grant. Options awarded under the Plans are exercisable up to ten years.

Stock Option Activity

Stock option activity for the nine months ended September 30, 2022 is presented below:


	Outstanding options	Weighted average exercise price	Weighted average remaining contractual term (years)	Aggregate intrinsic value (thousands)
Balance as of December 31, 2021	11,260,788	12.11	6.7	63,862
Granted	1,868,692	12.77
Exercised	(364,844)	8.30
Cancelled	(122,133)	16.76
Balance as of September 30, 2022	12,642,503	12.27	6.6	150
Vested and exercisable as of September 30, 2022	8,974,051	11.79	5.8	150
Vested and expected to vest as of September 30, 2022	12,437,571	12.25	6.6	150

The aggregate intrinsic value in the table above represents the difference between the fair value of common stock and the exercise price of outstanding, in-the-money stock options at September 30, 2022.

As of September 30, 2022, the total unrecognized stock-based compensation expense related to stock options outstanding was $24.0 million, which will be recognized over a weighted-average period of 2.4 years. The weighted-average fair value of stock options granted was $7.13 for the nine months ended September 30, 2022.

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Restricted Stock Unit, Restricted Stock Award and Performance Stock Unit Activity

In July 2022, the Company awarded PSUs to certain senior executives, pursuant to the 2018 Plan. The awards vest based upon continued service and achievement of certain financial performance goals and market conditions established by the board of directors or Compensation Committee for a predetermined period.

For PSUs that vest based upon continued service and achievement of certain financial performance conditions, the grant date fair value is determined based upon the market closing price of our Class A common stock on the date of the grant. Compensation expense is recognized over the requisite service period if it is probable that the performance condition will be satisfied. The number of PSUs issued could range from 0% up to 200% of the target amount.

In addition, we have issued market-based PSUs that vest based upon continued service and achievement of certain market conditions. The estimated grant date fair value for market-based PSUs is determined using the Monte Carlo valuation model. We recognize compensation expense for such awards over the requisite service period using the accelerated attribution method.

Stock award activity, which includes PSUs, RSAs and PSUs, for the nine months ended September 30, 2022 is presented below:


	Outstanding RSUs, RSAs and PSUs	Weighted-average grant date fair value per share	Weighted average remaining contractual term (years)	Aggregate intrinsic value (thousands)
Balance as of December 31, 2021	4,353,637	18.40	1.5	75,873
Awarded (1)	8,123,233	11.17
Released	(1,457,254)	17.38
Cancelled	(1,238,528)	16.35
Balance as of September 30, 2022	9,781,088	12.84	1.8	59,469
Vested and expected to vest as of September 30, 2022	8,526,468	12.82	1.7	51,841

(1) Includes approximately 1.4 million of PSUs granted during the third quarter of 2022.

As of September 30, 2022, the total unrecognized stock-based compensation expense related to RSUs outstanding, including PSUs, was $98.4 million, which will be recognized over a weighted-average period of 3.1 years.

Stock-based Compensation Expense

Stock-based compensation expense recognized in connection with stock options, RSUs, PSUs and the ESPP during each of the three and nine months ended September 30, 2022 and 2021 were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Cost of net revenue	$	179	$	197	$	625	$	735
Product development	5,456		4,258		15,240		12,515
Sales, marketing and support	2,226		1,426		6,065		4,160
General and administrative	5,669		6,419		18,688		18,575
Total	$	13,530	$	12,300	$	40,618	$	35,985

The Company capitalized $0.3 million and $0.5 million of stock-based compensation expense related to capitalized software costs during the three and nine months ended September 30, 2022, respectively, compared to $0.2 million and $0.4 million during the three and nine months ended September 30, 2021, respectively.

17. Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potentially dilutive securities outstanding for the period. As the Company had net losses for the three and nine months ended September 30, 2022 and 2021, all potentially issuable shares of common stock were determined to be anti-dilutive.

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The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share data):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021			2022		2021
Net loss	$	(21,124)	$	(16,813)		$	(59,397)	$	(122,244)
Weighted-average shares used in computing net loss per share, basic and diluted	98,543		94,462			98,069		93,794
Net loss per share, basic and diluted	$	(0.21)	$	(0.18)		$	(0.61)	$	(1.30)

The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share because including them would have had an anti-dilutive effect (in thousands):


	September 30, 2022	September 30, 2021
Shares related to convertible senior notes	19,538	19,538
Stock-options to purchase common stock	12,643	13,305
Restricted stock units	9,730	4,767
ESPP	102	52
Total shares of potentially dilutive securities	42,013	37,662

For the 2025 Notes and 2026 Notes, the conversion spread of 11.9 million shares and 7.6 million shares, respectively, will have a dilutive impact on diluted net income per share of common stock when the average market price of the Company’s Class A common stock for a given period exceeds the conversion price of $12.60 per share for the 2025 Notes and $27.89 per share for the 2026 Notes.

18. Income Taxes

The Company recorded an income tax benefit of $0.1 million and of $41,000 for the three and nine months ended September 30, 2022, respectively, compared to an income tax expense of $0.3 million and $0.9 million for the three and nine months ended September 30, 2021, respectively. The variance was primarily attributable to insignificant non-routine tax benefits and changes in our year over year taxable earnings mix.

The differences in the tax provision for the periods presented and the U.S. federal statutory rate is primarily due to foreign taxes in profitable jurisdictions and the recording of a full valuation allowance on our net deferred tax assets.

The computation of the provision for income taxes for interim periods is determined by applying the estimated annual effective tax rate to year-to-date earnings from recurring operations and adjusting for discrete tax items recorded in the period.

19. Geographic Information

The following table presents the Company's total net revenue by geography based on the currency of the underlying transaction (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021			2022		2021
United States	$	49,959	$	40,948		$	141,303	$	97,304
International	17,513		12,419			48,085		30,192
Total net revenue	$	67,472	$	53,367		$	189,388	$	127,496

No individual country, included in International net revenue, represents more than 10% of the total consolidated net revenue for any of the periods presented.

Substantially all of the Company's long-lived assets are located in the United States.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and with the audited financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (2021 Form 10-K) filed with the United States Securities and Exchange Commission (SEC) on February 18, 2022. In addition to historical condensed consolidated financial information, the following discussion and analysis contains forward-looking statements that are based upon current plans, expectations and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” in our 2021 Form 10-K and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022. References herein to "Eventbrite," the "Company," "we," "us" or "our" refer to Eventbrite, Inc. and its subsidiaries, unless the context requires otherwise.

Overview

Eventbrite is a global self-service ticketing and experience technology platform that serves event creators and empowers their success. Our mission is to bring the world together through live experiences, and since inception, we have been at the center of the experience economy, helping to transform the way people organize and attend events.

The Eventbrite platform was built as a self-service platform to make it possible for anyone to create and sell tickets to live experiences. We have a creator-aligned business model: we succeed when our creators succeed. We allow hosts of free events to use our platform for free and we charge creators of paid events on a per-ticket basis when an attendee purchases a ticket for an event. Our platform is designed to integrates seamlessly with internally-developed and third-party features designed to help our creators sell more tickets and scale their businesses.

We designed our platform to produce consistent and reliable performance and to handle surges in traffic and transaction volume associated with high demand on sales and support millions of events each year. We are continuing to strengthen our platform infrastructure as we shift from a monolithic architecture to one based on microservices. We believe the microservices infrastructure we are building will improve our platform's overall velocity, scalability and availability and ultimately benefit our event creators. This approach gives creators a platform that can scale to their needs, offering everything from basic registration and ticketing to a fully-featured event management platform.

To meet the varying needs of creators who come to our platform, we offer three different pricing packages for ticketing services. With Boost, we also offer three different paid monthly subscriptions for marketing services, each with corresponding levels of features to provide flexibility for each creator. Annual Boost subscriptions are available for a discounted rate. We also offer a Boost Pay As You Go email option. Furthermore, to provide creators with ways to promote their events to potential consumers, in the third quarter of 2022, we released Ads in ten US cities. The launch of Ads is expected to help creators expand their target market by fulfilling creators advertising demands through promoted listings on our website.

The global COVID-19 pandemic has tested our mission, our company and event creators in unprecedented ways. In the early days of the pandemic, we adapted quickly to meet creators’ urgent shift to online events, and over the past year, we pivoted back to powering in-person events as restrictions eased. We continue to be significantly impacted by the COVID-19 pandemic. The full extent and duration of the impact of the COVID-19 pandemic on our business, results of operations and financial condition remain uncertain and dependent on future developments that cannot be accurately predicted at this time, such as the introduction and spread of new variants or mutant strains of the virus, the continuation of existing or implementation of new government restrictions, and the extent of containment actions taken on event gatherings in general, and the impact of these and other factors on our business in particular, which may result in a reduction in events and an increase in event cancellation losses. Furthermore, as a result of economic pressures, including inflation, labor challenges, rising interest rates, economic recession and other factors, creators may scale back events which could materially and adversely affect our paid ticket volume, and consequently our net revenue and financial results.

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Key Business Metrics and Non-GAAP Financial Measures

We monitor key metrics to help us evaluate our business, identify trends affecting our business, formulate business plans and make strategic decisions. In addition to revenue, net loss, and other results under GAAP, the following tables set forth key business metrics and non-GAAP financial measures we use to evaluate our business. We believe these metrics and measures are useful to facilitate period-to-period comparisons of our business performance. We believe that the use of Adjusted EBITDA is helpful to our investors as this metric is used by management in assessing the health of our business and our operating performance, making operating decisions, evaluating performance and performing strategic planning and annual budgeting. This measure is not prepared in accordance with GAAP and has limitations as an analytical tool, and you should not consider this in isolation or as substitutes for analysis of our results of operations as reported under GAAP. You are encouraged to evaluate the adjustments and the reasons we consider them appropriate.

Paid Ticket Volume

Our success in serving creators is measured in large part by the number of tickets sold on our platform that generate ticket fees, referred to as paid ticket volume. We consider paid ticket volume an important indicator of the underlying health of the business. The table below sets forth the paid ticket volume for the periods indicated:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
	(in thousands)
Paid Ticket Volume	22,028	19,091	61,946	45,339

Our paid ticket volume for events outside of the United States represented 40% and 39% of our total paid tickets in the three and nine months ended September 30, 2022, respectively, compared to 34% and 35% in the three and nine months ended September 30, 2021, respectively.

Adjusted EBITDA

We calculate Adjusted EBITDA as net loss adjusted to exclude depreciation and amortization, stock-based compensation expense, interest expense, loss on debt extinguishment, employer taxes related to employee equity transactions, other income (expense), net, which consisted of interest income, foreign exchange rate gains and losses, and income tax provision (benefit). Adjusted EBITDA should not be considered as an alternative to net loss or any other measure of financial performance calculated and presented in accordance with GAAP.

The following table presents our Adjusted EBITDA for the periods indicated and a reconciliation of our Adjusted EBITDA to the most comparable GAAP measure, net loss, for each of the periods indicated:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in thousands)
Net loss	$	(21,124)	$	(16,813)	$	(59,397)	$	(122,244)
Add:
Depreciation and amortization	3,810		4,428		11,059		14,492
Stock-based compensation	13,529		12,300		40,618		35,985
Interest expense	2,826		2,814		8,461		13,200
Loss on debt extinguishment	—		—		—		49,977
Employer taxes related to employee equity transactions	167		400		734		1,875
Other (income) expense, net	5,100		2,460		9,818		2,882
Income tax provision (benefit)	(80)		311		(41)		885
Adjusted EBITDA	$	4,228	$	5,900	$	11,252	$	(2,948)

Some of the limitations of Adjusted EBITDA include (i) Adjusted EBITDA does not properly reflect capital spending that occurs off of the income statement or account for future contractual commitments, (ii) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures and (iii) Adjusted EBITDA does not reflect the interest and principal required to service our indebtedness. Our Adjusted EBITDA may not be comparable to similarly titled measures of other companies because they may not calculate

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Adjusted EBITDA in the same manner as we calculate the measure, limiting its usefulness as a comparative measure. In evaluating Adjusted EBITDA, you should be aware that in the future we will incur expenses similar to the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these expenses or any unusual or non-recurring items. When evaluating our performance, you should consider Adjusted EBITDA alongside other financial performance measures, including our net loss and other GAAP results.

Results of Operations

The following tables set forth our consolidated results of operations data and such data as a percentage of net revenue for the periods presented (in thousands):


Consolidated Statements of Operations	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net revenue	$	67,472	$	53,367	$	189,388	$	127,496
Cost of net revenue	23,450		18,238		66,465		49,966
Gross profit	44,022		35,129		122,923		77,530
Operating expenses:
Product development	22,249		16,678		63,308		48,393
Sales, marketing and support	14,455		11,360		41,866		23,357
General and administrative	20,596		18,319		58,908		61,080
Total operating expenses	57,300		46,357		164,082		132,830
Loss from operations	(13,278)		(11,228)		(41,159)		(55,300)
Interest expense	(2,826)		(2,814)		(8,461)		(13,200)
Loss on debt extinguishment	—		—		—		(49,977)
Other income (expense), net	(5,100)		(2,460)		(9,818)		(2,882)
Loss before income taxes	(21,204)		(16,502)		(59,438)		(121,359)
Income tax provision (benefit)	(80)		311		(41)		885
Net loss	$	(21,124)	$	(16,813)	$	(59,397)	$	(122,244)


Consolidated Statements of Operations, as a percentage of net revenue	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net revenue	100	%	100	%	100	%	100	%
Cost of net revenue	35	%	34	%	35	%	39	%
Gross profit	65	%	66	%	65	%	61	%
Operating expenses:
Product development	33	%	31	%	33	%	38	%
Sales, marketing and support	21	%	21	%	22	%	18	%
General and administrative	31	%	34	%	31	%	48	%
Total operating expenses	85	%	86	%	86	%	104	%
Loss from operations	(20)	%	(20)	%	(21)	%	(43)	%
Interest expense	(4)	%	(5)	%	(4)	%	(10)	%
Loss on debt extinguishment	—	%	—	%	—	%	(39)	%
Other income (expense), net	(8)	%	(5)	%	(5)	%	(2)	%
Loss before income taxes	(32)	%	(30)	%	(30)	%	(94)	%
Income tax provision (benefit)	—	%	1	%	—	%	1	%
Net loss	(32)	%	(31)	%	(30)	%	(95)	%

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Net Revenue

We generate revenues primarily from service fees and payment processing fees from the sale of paid tickets on our platform. We also derive a smaller portion of revenues from a series of marketing services and tools that enable creators to market their events and increase reach to attendees. Our fee structure typically consists of a flat fee and a percentage of the price of each ticket sold by a creator. Revenue is recognized when control of promised goods or services is transferred to the creator, which is when the ticket is sold for service fees and payment processing fees. Net revenue excludes sales taxes and value-added taxes (VAT) and is presented net of estimated customer refunds, chargebacks and amortization of creator signing fees.


	Three Months Ended September 30,								Nine Months Ended September 30,
	2022		2021		$ Change		% Change		2022		2021		$ Change		% Change
	(in thousands except percentages)
Net revenue	$	67,472	$	53,367	$	14,105	26	%	$	189,388	$	127,496	$	61,892	49	%

The increase in net revenue during the three and nine months ended September 30, 2022, compared to the same periods in 2021, was primarily driven by the growth in our paid ticket volume. Paid ticket volume increased by 15% and 37% during the three and nine months ended September 30, 2022, compared to the same periods in 2021. Also contributing to the increase in net revenue is a decline in refund activity during the three and nine months ended September 30, 2022 compared to the same periods in 2021.

Cost of Net Revenue

Cost of net revenue consists of variable costs related to payment processing fees and fixed costs related to making our platform generally available. Our fixed costs consist primarily of expenses associated with the operation and maintenance of our platform, including website hosting fees and platform infrastructure costs, amortization of capitalized software development costs, on-site operations costs and customer support costs. Cost of net revenue also includes the amortization expense related to our acquired developed technology assets, which may be incurred in future periods related to future acquisitions.

Generally, we expect cost of net revenue to fluctuate as a percentage of net revenue in the near- to mid-term primarily driven by the fixed costs absorption relative to total net revenue and our geographical revenue mix. Our payment processing costs for credit and debit card payments are generally lower outside of the United States due to a number of factors, including lower card network fees and lower cost alternative payment networks. Consequently, if we generate more revenue internationally, we expect that our payment processing costs will decline as a percentage of revenue. As our total net revenue increases or decreases and our fixed costs are unaffected, our cost of net revenue as a percentage of net revenue will similarly fluctuate.


	Three Months Ended September 30,										Nine Months Ended September 30,
	2022			2021			$ Change		% Change		2022			2021			$ Change		% Change
	(in thousands except percentages)
Cost of net revenue	$	23,450		$	18,238		$	5,212	29	%	$	66,465		$	49,966		$	16,499	33	%
Percentage of total net revenue	35		%	34		%					35		%	39		%
Gross margin	65		%	66		%					65		%	61		%

The increase in cost of net revenue during the three and nine months ended September 30, 2022 compared to the same periods in 2021, was primarily due to an increase in payment processing costs associated with the increase in ticket volume.

Our gross margin remained relatively consistent during the three months ended September 30, 2022, compared to the same period in 2021. Our gross margin improved during the nine months ended September 30, 2022, compared to the same period in 2021, primarily due to better fixed cost absorption as ticket volume and revenue increased.

Operating Expenses

Operating expenses consist of product development, sales, marketing and support and general and administrative expenses. Direct and indirect personnel costs, including stock-based compensation expense, are the most significant recurring component of operating expenses. We also include sublease income as a reduction of our operating expenses.

Creator related expenses, which consist primarily of reserves for estimated advance payout losses and recoverability of upfront payments, were significantly higher at the onset of the COVID-19 pandemic.

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As our total net revenue increases or decreases and to the extent our operating expenses are not equally affected, our operating expenses as a percentage of net revenue will similarly fluctuate.

Product development

Product development expenses consist primarily of employee-related costs including salaries, bonuses, benefits, and stock-based compensation, and third-party infrastructure expenses incurred in developing our platform including software subscription costs. Generally, we expect our product development expenses to increase in absolute dollars as we focus on enhancing and expanding the capabilities of our platform. Over the long term, we anticipate our product development expenses will decrease as a percentage of net revenue, as we expect our revenue to grow at a faster pace compared to product development expenses and as we continue to expand our development staff in lower cost markets.


	Three Months Ended September 30,										Nine Months Ended September 30,
	2022			2021			$ Change		% Change		2022			2021			$ Change		% Change
	(in thousands except percentages)
Product development	$	22,249		$	16,678		$	5,571	33	%	$	63,308		$	48,393		$	14,915	31	%
Percentage of total net revenue	33		%	31		%					33		%	38		%

The increase in product development expenses during the three and nine months ended September 30, 2022, compared to the same periods in 2021, was primarily driven by employee-related costs including stock-based compensation. The increase in employee-related costs was due to headcount growth in our product development and engineering organization, as we continue to focus our investment in building technology products on our platform.

Sales, marketing and support

Sales, marketing and support expenses consist primarily of costs associated with our employees involved in selling and marketing our products and in public relations and communication activities, in addition to marketing programs spend. For our sales teams, this also includes commissions. Sales, marketing and support expenses are driven by investments to grow and retain creators and attendees on our platform. Additionally, we classify certain creator-related expenses, such as refunds of the ticket price paid by us on behalf of a creator and reserves for estimated advance payout losses, as sales, marketing and support expenses.


	Three Months Ended September 30,										Nine Months Ended September 30,
	2022			2021			$ Change		% Change		2022			2021			$ Change		% Change
	(in thousands except percentages)
Sales, marketing and support	$	14,455		$	11,360		$	3,095	27	%	$	41,866		$	23,357		$	18,509	79	%
Percentage of total net revenue	21		%	21		%					22		%	18		%

The increase in sales, marketing and support expenses during the three months ended September 30, 2022, compared to the same period in 2021, was primarily due to a $2.1 million increase in employee-related costs including stock-based compensation due to headcount growth. The remaining increase was attributable to expenses for marketing our product and building brand awareness.

The increase in sales, marketing and support expenses during the nine months ended September 30, 2022, compared to the same period in 2021, was primarily due to changes to our advance payout reserve. There was no change to our advance payout reserve during the nine months ended September 30, 2022. During the nine months ended September 30, 2021, we recorded a $10.0 million reduction in reserve due to lower-than-anticipated losses since the start of the pandemic. This resulted in an overall increase to our sales, marketing and support expenses of $10.0 million during the nine months ended September 30, 2022. The remaining increase was primarily attributable to a $5.8 million increase in employee-related costs including stock-based compensation due to headcount growth.

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General and administrative

General and administrative expenses consist of personnel costs, including stock-based compensation, and professional fees for finance, accounting, legal, risk, human resources and other corporate functions. Our general and administrative expenses also include accruals for sales and business taxes, as well as reserves and impairment charges related to creator upfront payments. Over the long-term, we anticipate general and administrative expenses to decline as a percentage of net revenue as we expect to grow our net revenues and scale our business.


	Three Months Ended September 30,										Nine Months Ended September 30,
	2022			2021			$ Change		% Change		2022			2021			$ Change		% Change
	(in thousands except percentages)
General and administrative	$	20,596		$	18,319		$	2,277	12	%	$	58,908		$	61,080		$	(2,172)	(4)	%
Percentage of total net revenue	31		%	34		%					31		%	48		%

The increase in general and administrative expenses during the three months ended September 30, 2022, compared to the same period in 2021, was primarily due to an increase in employee-related costs, due to headcount growth.

The decrease in general and administrative expenses during the nine months ended September 30, 2022, compared to the same period in 2021, consisted of a $5.5 million decrease to creator upfronts reserves, attributable to improvements since the COVID-19 pandemic and repayments received on outstanding creator upfront balances. There was a $2.6 million decrease to creator upfronts reserves during the nine months ended September 30, 2022. During the nine months ended September 30, 2021, we recorded a $2.9 million increase in creator upfronts reserve.

Additionally, the decrease in general and administrative expenses during the nine months ended September 30, 2022, compared to the same period in 2021, consisted of a $4.7 million decrease in litigation settlement expense. This was offset by a $4.8 million increase in employee-related costs including stock-based compensation expense due to headcount growth.

Interest Expense

In March 2021, we issued the 2026 Notes, which consisted of $212.75 million aggregate principal amount of 0.750% convertible senior notes due 2026. In June 2020, we issued $150.0 million aggregate principal amount of 5.000% convertible senior notes due 2025.

Interest expense consists primarily of cash interest expense and amortization of debt discount and issuance costs on our term loans under the May 2020 credit agreement, 2025 Notes and 2026 Notes. The credit agreement entered into in May 2020 was terminated on March 11, 2021.


	Three Months Ended September 30,										Nine Months Ended September 30,
	2022			2021			$ Change		% Change		2022			2021			$ Change		% Change
	(in thousands except percentages)
Interest expense	$	2,826		$	2,814		$	12	—	%	$	8,461		$	13,200		$	(4,739)	(36)	%
Percentage of total net revenue	4		%	5		%					4		%	10		%

Interest expense remained relatively consistent for the three months ended September 30, 2022 compared to the three months ended September 30, 2021.

The decrease in interest expense during the nine months ended September 30, 2022, compared to the same period in 2021, was primarily due to a $5.4 million decrease in interest on the term loans which were repaid in the first quarter of 2021.

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Loss on Debt Extinguishment

In March 2021, we repaid in full the outstanding indebtedness under our May 2020 credit agreement by making payments of $125.0 million of principal, a $18.2 million make-whole premium, $9.0 million payment in kind interest and $1.0 million of accrued interest.


	Three Months Ended September 30,							Nine Months Ended September 30,
	2022		2021		$ Change	% Change		2022			2021			$ Change		% Change
	(in thousands, except percentages)
Loss on debt extinguishment	—		—		—	—	%	$	—		$	(49,977)		$	49,977	100	%
Percentage of total net revenue	—	%	—	%				—		%	(39)		%

We recorded a loss on debt extinguishment of $50.0 million during nine months ended September 30, 2021. The loss primarily related to the write-off of unamortized debt discount and issuance costs of $31.8 million and make-whole premiums of $18.2 million. Unamortized debt discounts primarily related to 2,599,174 shares of Class A common stock issued to FP EB Aggregator, L.P. for a purchase price of $0.01 per share. We accounted for these shares at fair value and recorded $27.4 million as debt discount at issuance. The remaining unamortized discounts and issuance costs relate to the cash costs incurred during the issuance of the term loan.

Other Income (Expense), Net

Other income (expense), net consists primarily of interest income and foreign exchange rate remeasurement gains and losses recorded from consolidating our subsidiaries each period-end. The primary driver of our other income (expense), net is fluctuation in the value of the U.S. dollar against the local currencies of our foreign subsidiaries.


	Three Months Ended September 30,										Nine Months Ended September 30,
	2022			2021			$ Change		% Change		2022			2021			$ Change		% Change
	(in thousands except percentages)
Other income (expense), net	$	(5,100)		$	(2,460)		$	(2,640)	107	%	$	(9,818)		$	(2,882)		$	(6,936)	241	%
Percentage of total net revenue	(8)		%	(5)		%					(5)		%	(2)		%

The increase in other expense during the three and nine months ended September 30, 2022, compared to the same periods in 2021, was driven by foreign currency rate measurement fluctuations offset by an increase in interest income. We recognized foreign currency rate measurement losses during the three and nine months ended September 30, 2022 as a result of the overall strengthening of the U.S. dollar compared to the currencies with which we operate and process transactions.

Income Tax Provision (Benefit)

Income tax provision consists primarily of U.S. federal and state income taxes and income taxes in certain foreign jurisdictions in which we conduct business. The differences in the tax provision for the periods presented and the U.S. federal statutory rate is primarily due to foreign taxes in profitable jurisdictions and the recording of a full valuation allowance on our deferred tax assets in certain jurisdictions including the United States. The computation of the provision for income taxes for interim periods is determined by applying the estimated annual effective tax rate to year-to-date earnings from recurring operations and adjusting for discrete tax items recorded in the period.


	Three Months Ended September 30,										Nine Months Ended September 30,
	2022			2021			$ Change		% Change		2022			2021			$ Change		% Change
	(in thousands except percentages)
Income tax provision (benefit)	$	(80)		$	311		$	(391)	(126)	%	$	(41)		$	885		$	(926)	(105)	%
Percentage of total net revenue	—		%	1		%					—		%	1		%

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The variance in provision for income taxes for the three and nine months ended September 30, 2022, compared to the same periods in 2021, was primarily attributable to insignificant non-routine tax benefits and changes in our year over year taxable earnings mix.

Liquidity and Capital Resources

As of September 30, 2022, we had cash and cash equivalents of $675.8 million. Our cash and cash equivalents includes bank deposits and money market funds held by financial institutions and is held for working capital purposes. As of September 30, 2022, approximately 25% of our cash was held outside of the United States. We do not expect to incur significant taxes related to these amounts. The cash was held primarily to fund our foreign operations and on behalf of, and to be remitted to, creators. Collectively, our cash and cash equivalents balances represent a mix of cash that belongs to us and cash that is due to creators.

The amounts due to creators, which were $354.9 million as of September 30, 2022, are captioned on our consolidated balance sheets as accounts payable, creators. Creator cash is legally unrestricted, and while generally we have not utilized creator cash for our own financing or investing activities in the past, we may invest a portion of creator cash in short-term investments in future periods. For qualified creators, we pass ticket sales proceeds to the creator prior to the event, subject to certain limitations. Internally, we refer to these payments as advance payouts. When an advance payout is made, we reduce our cash and cash equivalents with a corresponding decrease to our accounts payable, creators. As of September 30, 2022, advance payouts outstanding was approximately $394.0 million, including $141.3 million issued since the third quarter of 2020, when we resumed the program on a limited basis.

When we provide advance payouts, we assume risk that the event may be cancelled, fraudulent or materially not as described, resulting in significant chargebacks and refund requests. The terms of our standard merchant agreement obligate creators to repay us for ticket sales advanced under such circumstances. If the creator is insolvent or has spent the proceeds of the ticket sales for event-related costs, we may not be able to recover our losses from these events. The COVID-19 pandemic has increased the likelihood that we will not recover the losses from ticket sales advanced prior to the COVID-19 pandemic. Such unrecoverable amounts could equal up to the value of the ticket sales or amounts settled to the creator prior to the event that has been postponed or cancelled or is otherwise disputed. We record estimates for losses related to chargebacks and refunds based on various factors, including the amounts paid and outstanding to creators in conjunction with the advance payout program, the nature of future events, the remaining time to event date, macro-economic conditions and current events, and actual chargeback and refund activity during the current year. The exposure on advance payouts issued since the third quarter of 2020 has typically experienced quicker resolution with more events being completed on time. However, due to the nature of the COVID-19 pandemic and the limited amount of currently available data, there is a high degree of uncertainty around these reserves and our actual losses could be materially different from our current estimates. We will adjust our recorded reserves in the future to reflect our best estimates of future outcomes, and we may pay in cash a portion of, all of, or a greater amount than the $20.4 million provision recorded as of September 30, 2022.

Debt

In June 2020, we issued the 2025 Notes, and in March 2021, we issued the 2026 Notes. The 2025 Notes mature on December 1, 2025 and the 2026 Notes mature on September 15, 2026. Under certain circumstances, holders may surrender their notes of a series for conversion prior to the applicable maturity date. Upon conversion, the notes may be settled in cash, shares of Class A common stock, or a combination of cash and shares of Class A common stock, at our election.

We believe that our existing cash, together with cash generated from operations, will be sufficient to meet our anticipated cash needs for at least the next 12 months. However, our liquidity assumptions may prove to be incorrect, and we could exhaust our available financial resources sooner than we currently expect.

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Cash Flows

Our cash flow activities were as follows for the periods presented:


	Nine Months Ended September 30,
	2022		2021
	(in thousands)
Net cash provided by (used in):
Operating activities	$	47,271	$	116,239
Investing activities	(4,684)		(1,658)
Financing activities	(1,585)		46,634
Net increase in cash, cash equivalents and restricted cash	$	41,002	$	161,215

Comparison of Nine Months Ended September 30, 2022 and 2021

Cash Flows from Operating Activities

The net cash provided by operating activities of $47.3 million for the nine months ended September 30, 2022 was due primarily to our net loss of $59.4 million, adjusted for non-cash charges primarily consisting of $40.6 million stock-based compensation expense, $11.1 million depreciation and amortization, $10.9 million increase in reserves for chargebacks and refunds and $1.8 million adjustments to creator related assets. Additional cash was provided by changes in working capital consisting of a $69.7 million increase in accounts payable to creators due to an increase in paid ticket volume, $9.4 million decrease in other accrued liabilities, $8.3 million decrease in funds receivable and other carrying balances that resulted in cash outflows of $11.6 million.

The net cash provided by operating activities of $116.2 million for the nine months ended September 30, 2021 primarily resulted from our net loss of $122.2, adjusted for non-cash charges primarily consisting of $50.0 million loss on debt extinguishment of the term loans, $36.0 million stock-based compensation expense, $14.5 million depreciation and amortization, and $5.6 million non-cash interest expense. Additional cash was provided by changes in working capital consisting of a $136.5 million in accounts payable to creators due to an increase in paid ticket volume.

Cash Flows from Investing Activities

Net cash used in investing activities of $4.7 million for the nine months ended September 30, 2022 consisted of $1.1 million holdback consideration associated with ToneDen acquisition, $2.3 million capitalized internal-use software development costs and $1.3 million purchases of property and equipment.

Net cash used in investing activities of $1.7 million for the nine months ended September 30, 2021 consisted of capitalized software development costs and purchases of property and equipment.

Cash Flows from Financing Activities

Net cash used in financing activities of $1.6 million during the nine months ended September 30, 2022 was primarily due to $5.3 million taxes paid related to net share settlement of equity awards. Offset by $3.0 million proceeds from the exercise of stock options and $0.8 million proceeds from issuance of common stock under ESPP.

Net cash provided by financing activities of $46.6 million during the nine months ended September 30, 2021 was primarily due to $207.0 million proceeds from issuing the 2026 Notes, net of issuance costs, and $10.3 million proceeds from the exercise of stock options, offset by $143.2 million repayment of term loans including prepayment premium, $18.5 million purchase of the 2026 Capped Calls in connection with the issuance of the 2026 Notes and $9.4 million taxes paid related to net share settlement of equity awards.

Contractual Obligations and Commitments

Our principal commitments consist of obligations under the 2025 Notes and 2026 Notes (including principal and coupon interest), operating leases for office space, as well as non-cancellable purchase commitments. See Note 15, "Commitments and

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Contingencies" to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

Off-Balance Sheet Arrangements

We do not currently have any off-balance sheet arrangements and did not have any such arrangements as of September 30, 2022.

Critical Accounting Policies and Estimates

Our unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances, and we evaluate our estimates and assumptions on an ongoing basis. Due to the ongoing COVID-19 pandemic, there is uncertainty and significant disruption in the global economy and financial markets. We have had to make significant estimates in our unaudited condensed consolidated financial statements, specifically related to chargebacks and refunds due to cancelled or postponed events. We are not aware of any specific event or circumstance that would require an update to our estimates or assumptions or a revision of the carrying value of assets or liabilities as of the date of filing of this Quarterly Report on Form 10-Q. These estimates and assumptions may change in the future, however, as new events occur and additional information is obtained. Our actual results could differ from these estimates.

Our significant accounting policies are discussed in the "Notes to Consolidated Financial Statements, Note 2 "Significant Accounting Policies" in the 2021 Form 10-K. There have been no significant changes to these policies that have had a material impact on our unaudited condensed consolidated financial statements and related notes.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Sensitivity

As of September 30, 2022, our 2025 Notes and 2026 Notes were outstanding, both of which are subject to fixed annual interest charges. We have therefore no financial or economic exposure associated with changes in interest rates. However, the fair value of these financial instruments may fluctuate when interest rates change or can be affected when the market price of our Class A common stock fluctuates. We carry the convertible senior notes at face value less unamortized issuance cost on our balance sheet, and we present the fair value for required disclosure purposes only.

Foreign Currency Risk

Many creators live or operate outside the United States, and therefore, we have significant ticket sales denominated in foreign currencies, most notably the British Pound, Euro, Canadian Dollar and Australian Dollar. Our international revenue, as well as costs and expenses denominated in foreign currencies, expose us to the risk of fluctuations in foreign currency exchange rates against the U.S. dollar. Accordingly, we are subject to foreign currency risk, which may adversely impact our financial results. The functional currency of our international subsidiaries is the U.S. dollar. Movements in foreign exchange rates are recorded in other income (expense), net in our condensed consolidated statements of operations. We have experienced and will continue to experience fluctuations in foreign exchange gains and losses related to changes in exchange rates. If our foreign-currency denominated assets, liabilities, revenues, or expenses increase, our results of operations may be more significantly impacted by fluctuations in the exchange rates of the currencies in which we do business. A 10% increase or decrease in current exchange rates would not have a material impact on our consolidated results of operations.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of the principal executive officer and principal financial officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report.

Based on that evaluation, the principal executive officer and the principal financial officer concluded that, as of September 30, 2022, our disclosure controls and procedures were effective to provide reasonable assurance that the information required for disclosure in reports filed or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to Company management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that occurred during the quarter ended September 30, 2022 which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Disclosure Controls and Procedures

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

See Note 15, "Commitments and Contingencies" to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

There have been no material changes from the risk factors set forth in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and Part II, Item 1A, of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022. You should carefully consider the risks and uncertainties described in the reports referenced above, together with all of the other information in the reports referenced above and this Quarterly Report on Form 10-Q, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, and other documents that we file with the U.S. Securities and Exchange Commission. The risks and uncertainties described in the reports referenced above may not be the only ones we face. If any of the risks actually occur, our business, results of operations, financial condition and prospects could be harmed. In that event, the market price of our Class A common stock could decline, and you could lose part or all of your investment. Many of the risks and uncertainties are, and will be, exacerbated by the COVID-19 pandemic and any worsening of the global business and economic environment as a result.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

There were no sales of unregistered equity securities during the three months ended September 30, 2022.

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Item 6. Exhibits

The exhibits listed on the accompanying Exhibit Index are filed or incorporated by reference as part of this Quarterly Report on Form 10-Q.

Exhibit Index

Description of Exhibits

Incorporated by Reference

Exhibit
Number

Form

Exhibit Number

Date Filed

3.2

Amended and Restated Certificate of Incorporation.

S-1/A

3.2

August 28, 2018

3.4

Amended and Restated Bylaws.

S-1/A

3.4

August 28, 2018

4.1

Form of Class A Common Stock Certificate.

S-1/A

4.1

September 7, 2018

10.1#

Form of Performance Stock Unit Award Agreement - Financial performance

10-Q

10.2

July 28, 2022

10.2#

Form of Performance Stock Unit Award Agreement - Stock Price performance

10-Q

10.3

July 28, 2022

31.1

Certification of the Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Filed herewith

31.2

Certification of the Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Filed herewith

32.1*

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Filed herewith

101.INS

Inline XBRL Instance Document

Filed herewith

101.SCH

Inline XBRL Taxonomy Extension Schema Document

Filed herewith

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Filed herewith

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

Filed herewith

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

Filed herewith

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Filed herewith

104

Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

Filed herewith

# Indicates compensatory plan

*The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.

Table of Contents

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Eventbrite, Inc.

November 3, 2022	By:	/s/ Julia Hartz
		Julia Hartz
		Chief Executive Officer
		(Principal Executive Officer)

November 3, 2022	By:	/s/ Charles Baker
		Charles Baker
		Chief Financial Officer
		(Principal Financial Officer)

November 3, 2022	By:	/s/ Xiaojing Fan
		Xiaojing Fan
		Chief Accounting Officer
		(Principal Accounting Officer)