Venu Holding - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 revenue was $3.50M, down 11% year over year, with a net loss attributable to common stockholders of $18.06M; management attributed softer top-line to a daypart shift at Notes Eatery and slightly weaker performance at Bourbon Brothers and Phil Long Event Center in Colorado Springs.
• Luxe FireSuite and Aikman Club fractional ownership sales reached $38.7M in Q1, including $12.5M from the newly launched structured financing program since late February, bolstering balance sheet assets and development funding; total assets rose 19% q/q to $212.9M and property & equipment rose 33% q/q to $182.9M.
• Guidance reiterated: a development profit expected in 2025 (sale-leaseback of Ford Amphitheater ground) and first operational profitability targeted in 2026 with four major venues online; expansion accelerated via Ryan LLC, with two new public-private partnerships per quarter envisioned.
• Catalysts: formal acquisition of the ~20-acre El Paso site with $8M forgivable loan and incentives, and structured financing expanding the buyer pool (including triple-net investors), plus sponsorship push via Connect Partnership Group; board strengthened by adding ex-Barings CEO Tom Finke.

What Went Well and What Went Wrong

What Went Well

• Record fractional ownership momentum: “over $38,000,000 in fractional ownership sales across our venues… well on our way toward our quarter of a billion dollar goal in 2025”. Structured financing uptake: 32% of buyers opted to finance purchases since launch.
• Strategic partnerships to accelerate expansion and monetization: Ryan LLC to deliver two new public-private partnerships per quarter; Sands Investment Group to market NNN FireSuites targeting 11–12% cap rates; Connect Partnership Group to lead sponsorship sales.
• Asset base and pipeline strengthened: Total assets +$34.5M q/q to $212.9M; property & equipment +$45.7M q/q; El Paso development footprint expanded to 20 acres with incentives and $100M minimum investment commitment.

What Went Wrong

• Revenue declined 11% YoY to $3.50M, with notable softness in restaurant and event center revenues; restaurant revenue fell to $2.04M (from $2.58M), event center revenue to $0.98M (from $1.32M).
• Operating costs scaled with development stage: total operating costs rose to $22.04M (from $16.91M), including $11.34M in equity-based compensation and $1.38M depreciation/amortization; loss from operations widened to $(18.54)M.
• Cash burn intensified: cash used in operations was $(9.04)M; capex was $(22.05)M; interest expense rose to $(1.05)M as debt and convertible liabilities ramped to fund development.

Transcript

Operator (participant)

Good afternoon and welcome to Venue Holding Corporation's first quarter 2025 financial results and business update. Earlier today, Venue, trading under the ticker symbol VENU, issued a press release summarizing the company's first quarter 2025 performance, following the filing of its quarterly report on Form 10-Q for the period ending March 31, 2025. This conference call is being recorded and will be available online along with the earnings press release at Venue, live in accordance with the company's retention policies. All participants on today's call are in listen-only mode. Following our prepared remarks, we will open the line for a Q&A session. At this time, I'd like to turn the call over to Heather Atkinson, Chief Financial Officer at Venue Holding Corporation. Heather, please go ahead.

Heather Atkinson (CFO)

Thank you all for joining Venue Holding Corporation's first quarter 2025 earnings call and business update. On the call today, we have our senior leadership team, myself, Founder, Chairman, and CEO JW Roth, and President Will Hodgson. Following the Safe Harbor statement, JW will provide a review and share highlights from across the business. Will is going to provide an operational update on Venue. I will then provide a summary of the quarterly financial results. After that, as our operator mentioned, we will open the call for questions. We'd like to remind everyone that various remarks about future expectations, plans, and prospects constitute forward-looking statements for purposes of Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.

Venue cautions that these forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from those indicated, including risks described in the company's quarterly report on Form 10-Q for the quarter ended March 31, 2025, and our other filings with the SEC, all of which can be reviewed on the company's website at www.venue.live, spelled VENU.LIVE, or on the SEC's website at sec.gov. Any forward-looking statements made on this conference call speak only as of today's date, Thursday, May 15, 2025, and Venue does not intend to update any of these forward-looking statements to reflect events or circumstances that would occur after today's date, except as may be required by federal securities laws. With that, I'd like to turn the call over to our Founder, Chairman, and CEO, JW Roth. JW?

JW Roth (Founder, Chairman, and CEO)

Heather, thank you. Good afternoon, everyone. We appreciate you joining us today. Okay, I'm going to dig into some prepared remarks, and then we'll move into our question-and-answer session. This first quarter was incredible. Venue was founded on the simple idea to build world-class live music and hospitality destinations that focus on the fan, and our disruptive model designed around artistic, fan-focused, experience-driven ambiance is absolutely working. We have witnessed fans and shareholders eager to join in on the venue movement. To better explain the impact of the next few reports, let me take a quick moment and explain how we do what we do. We work with municipalities to identify the economic impact our venues would have on their community because we have seen we are a tide that rises all boats.

We then work with the municipality to create public-private partnerships that lead to one of our state-of-the-art venues being built in their city. Now, how do we finance what we do? 40% of our financing comes from the municipality partner in each market in the form of real estate, tax incentives, and cash. 40% of the financing comes from the pre-sale of fractional ownerships in each venue. Venue's unique Luxe Fire Suite offers fractional ownership in venue-owned Sunset Amphitheaters. Owning a fire suite is like owning a condo within a condo building, except in this case, the condo building is the amphitheater and the condo is the fire suite. 20% of the financing comes from the sale lease back of the real estate that was contributed by the municipality. In fact, this sale lease back typically generates a development profit. How does Venue turn profits?

Number one, we turn profits in the sale of fractional ownership in our venues. We develop raw property contributed by municipalities into state-of-the-art venues with fractional ownerships. Those ownerships go directly onto our balance sheet. These fractional ownerships, along with the sale lease back, result in a development profit, of which we expect our first one to happen this year. Number two, profits from operations. These come as a result of our co-promotion agreements and vendor agreements that are associated with our amphitheaters. Additionally, through the internal operations from our non-amphitheater entities. Q1 posted our biggest quarter yet, with over $38 million in fractional ownership sales across our venues, well on our way toward our quarter of a billion dollar goal in 2025. These fractional ownerships are the backbone of the powerhouse that we are building. Remember, these all go directly onto our balance sheet.

As for our P&L, we will not look back at our losses this first quarter and apologize. The bulk of these costs were non-cash and non-recurring development expenses. In fact, these costs are driving the most powerful development engine in music, which will turn us profitable later this year with our first development profit and operationally profitable in 2026. As part of that engine, we launched an official partnership with Ryan to rapidly accelerate our national expansion. This relationship and partnership is three years long and is contracted to deliver two new public-private partnerships per quarter. Remember, on average, we can expect to add between $100 million and $300 million to our balance sheet with each delivered development agreement. Along the same note, a significant part of this first quarter's staggering balance sheet increase was the property acquisitions.

This week, we closed on another 20-acre property for a 12,500-seat multi-seasonal outdoor music venue in El Paso, Texas. The Sunset Amphitheater in El Paso includes a $31.5 million performance-based incentive package from the city of El Paso, Texas. Earlier in the quarter, we also went under contract to acquire a property in the high-growth suburb of Centennial, just outside of Denver, Colorado, where we plan to build an iconic state-of-the-art indoor music hall, private event space, and restaurant. Let me pause here and talk a little bit about the development timelines, which will include all of our announced projects. Starting with this year, we will have nine open and operating entities. That includes three concert halls and event spaces, one amphitheater, and five restaurants and bars.

In 2026, we are expected to have a total of 16 open and operating entities, including seven concert halls and event spaces, four fully functioning amphitheaters, five restaurants, and bars. As we have discussed, our expansion engine is in full gear, and we're thrilled to officially unveil our upcoming locations in the months ahead. Circling back quickly to the fractional ownerships. These fractional ownerships, as previously mentioned, are also known as Luxe Fire Suites. Until February of this year, the only way you could participate in this offering was to pay cash upfront. Our team saw an opportunity to introduce structured financing. Now buyers can access structured payment plans and finance their purchases over time. Since launching, we have seen more than 32% of our buyers choose to finance over traditional payments. Further, Luxe Fire Suites continue to be Venue's most sought-after ownership opportunity.

Because of this, we have launched a partnership with one of the nation's fastest-growing net lease companies, Sands Investment Group, to offer innovative triple-net real estate opportunities. Through this approach, qualified investors can now participate in Venue's income-producing long-term asset under a triple-net lease structure, offering a projected 11%-12% cap rate. Finally, we have made strategic additions to our team in the first quarter, like bringing on Connect Partnership Group to serve as our official sponsorship sales partner, accelerating our corporate sales and partnership strategy across our brand portfolio. Additionally, we have added financial leader and strategic growth advisor, Mr. Thomas M. Fink, to our board of directors. Mr. Fink has over 35 years of experience in financial services, including Invesco, Babson Capital, MassMutual, and Barron's. Our Venue executive leadership team also grew with the announcement and addition of Executive Vice President of Operations, Vic Sutter.

Vic has spent the last 20 years in luxury hospitality brands across the United States. The last decade with Live Nation. He is responsible for driving our operational excellence, hospitality, and innovation, and premium guest experiences across all of our premium brands. With that said, I would like to turn the conference over to President Will Hodgson. Will, please go ahead.

Will Hodgson (President)

Thanks, JW.

Hey all, thanks so much for joining us. As JW mentioned, we have a lot going on at Venue. Our team is spending time focused on the core of our business across our hospitality brands, clubs, and amphitheater operations. Q1 top-line sales were modestly lower year-over-year, driven by a day-park shift at No Teetery and a slightly softer performance at Bourbon Brothers and Phil Long Event Center here in Colorado Springs. We are in a product and service development phase, though, implementing several new strategies to enhance our programming, add additional ancillary revenue streams, and improve fan and guest retention. Booking more diverse genres in our clubs, investigating robust customer engagement partnerships, implementing new seating configurations, and creating new revenue streams are all meant to better monetize the guest journey, encourage longer dwell times, and provide higher growth potential for artists.

We are also preparing to open the Sunset Hospitality Collection here at Ford Amphitheater this fall in Colorado Springs, anchored by our very exciting new fine dining experience, Ross Seafood and Chophouse. Look for new menu items and mixology offerings at our Bourbon Brothers Smokehouse and Tavern outlets as well, along with new private event packages. As we move through 2025, Venue is positioned for major, major growth. We are not only expanding, given what you just heard from JW, we are also hard at work unlocking more value from our current operations, smarter food and beverage strategies, refined premium offerings, and targeted and enhanced analytics to help boost profitability and efficiency across the board. Most importantly, we are keeping our focus where it belongs, delivering unforgettable experiences for both guests and artists while raising the bar at every turn.

With that, I'll turn it back over to our Chief Financial Officer, Heather Atkinson. Heather, please go ahead.

Heather Atkinson (CFO)

Thank you, Will. I appreciate everyone being on the call today. I'm going to dive right into some performance highlights from our 10-Q and our earnings release. A few highlights from our balance sheet. Our total assets increased 19% for the quarter from $178,417,515 to $212,882,187 as of March 31, 2025, up from $178,417,515 as of December 31, 2024. Along that same vein, our property and equipment increased 33% to $182,906,195 as of March 31, 2025, up from $137,215,936 at December 31, 2024. As JW mentioned before, our Luxe Fire Suite and Aikman Club sales reached $38.7 million for the three months ended March 31, 2025. A big push of that was since launching in late February, Venue's Luxe Fire Suite fractional ownership model, which offers suite access at Sunset McKinney and Sunset Broken Arrow, where investors can put 25% down and offers 20-year financing.

It generated $12.5 million in sales through March 31, 2025, out of that $38.7 million total offering. Huge increases in our balance sheet. That really strengthened our balance sheet for the first quarter. We are super excited about what that is going to offer and how it is really going to continue to increase our balance sheet through the rest of 2025. Venue is really poised to continue to strengthen our balance sheet. With that, I would like to turn it over back to JW for our Q&A session. JW?

JW Roth (Founder, Chairman, and CEO)

Heather, thank you. We couldn't be more excited about where we're going and all that we're doing here at Venue. Literally, we are building a machine that will change and disrupt music. Again, I appreciate Heather and Will participating here. Now we'll open it up for questions. Operator?

Operator (participant)

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. We'll pause just a moment to assemble the queue. We'll take our first question from Martin Calvert. I'm sorry, I apologize. Yes, Martin Calvert at Morgan Stanley.

Martin Calvert (SVP and Financial Advisor)

It's Martin Calvert, but it's close. JW, Will, Heather, really good quarter. Amazing news out there. I'm really interested in the Ryan Companies partnership. I know that you guys have stated you're looking at 250,000 seats in five years, your projection. Is that going to speed that up? If so, how significantly?

JW Roth (Founder, Chairman, and CEO)

Marty first, thanks for joining. I appreciate your question. I just appreciate the support that you and folks at Morgan Stanley give us. Yeah, the relationship with Ryan is fuel on our fire. I mean, it is dramatically accelerating our expansion. Think about this. We add between $100 million and $300 million to our balance sheet with every development agreement, and they're committed to bringing us two of them a quarter. That's eight a year. They've just been great partners. At the end of the day, Ryan will add fuel to this fire. At the end of the day, they're going to add about 200% what our original projections were in terms of adding amphitheaters and music halls. Wow. Wow. That's huge. It is. It is. I got to tell you, Mayor Mossow has been not only an advocate from the very beginning.

Remember, the reason that we're in McKinney is because of Mayor Mossow and Ryan. The reason we're in El Paso is because of Ryan and Mayor Mossow. It is not like they're an unproven commodity. What they have done for us already sort of proves the tempo in which we're going to roll this out. Again, Marty, I'm so grateful for you and thankful for your participation today. Buckle up. Here we go.

Martin Calvert (SVP and Financial Advisor)

Thank you and your team, JW. Really appreciate it.

JW Roth (Founder, Chairman, and CEO)

You bet.

Operator (participant)

We'll move next to Jon Lutz at iHit Industries.

Jon Lutz (President)

Hey, JW. Good to be on the call. Sorry if I have a little wind in the background. I'm on the golf course.

JW Roth (Founder, Chairman, and CEO)

All right.

Jon Lutz (President)

There you go. I've been to several concerts at the Ford Amphitheater and loved it last summer. I'm just wondering what kind of new exciting things you might have in the offing for Ford and maybe some of the other venues.

JW Roth (Founder, Chairman, and CEO)

John, first, I hope you're hitting them straight today. To answer your question, we're excited about a lot of things. I'm going to start with our expansion plan. Our expansion plan, as it rolls out, is allowing us to add, again, two or so new development agreements per quarter. That's the first thing that we're excited about. The second piece of our excitement focuses on the sale of our fire pit suites. As you can see, we have accelerated that. We believe we can cross a quarter of a billion dollars this year in sales. The new financing metrics and the new financing programs that are falling into place with both banks and ultimately the FDA will be fuel to that fire.

When we cap it all off, it all comes down to the fan experience in our venues, adding Vic to the mix here and adding to the ambiance and experience that we have at our venues and our shows. Those are all things that you can expect to watch us grow.

Jon Lutz (President)

Thanks so much, JW. Keep up the good work.

JW Roth (Founder, Chairman, and CEO)

Thank you.

Operator (participant)

We'll move next to Wes Gottesman at Raymond James.

Wes Gottesman (Financial Advisor)

Hey, JW. How's it going? Wes Gottesman here.

JW Roth (Founder, Chairman, and CEO)

Wes, it's good to have you on.

Wes Gottesman (Financial Advisor)

Absolutely. Good to be here. Thank you. My question for you, a significant differentiator for Venue is, of course, the fire pit suites, which you've been talking about, which have also had strong momentum over the past few months. On the last call, we heard about the launch of the fire suite financing. Can you talk more about that, how it works, and how it's been performing so far?

JW Roth (Founder, Chairman, and CEO)

Yeah, good question. Fire pit suites drive the development of our business, right? I mean, it's what pushes forward the financing as we move into these new markets. We have been working diligently to expand not only how investors and how fans can purchase fire pit suites, but how they're marketed. The first piece of your question sort of is answered with the financing model that we have in place has increased sales about 32% across the board. We expect that to increase over the next quarter or so. Additionally, we're expanding beyond the markets where we're building and into markets where investors can participate in owning fire pit suites.

In other words, a triple-net investor that typically buys, let's say, a Walgreens, who lives in Green Bay, Wisconsin, can now buy a triple-net product of ours in the form of a fire pit suite in one of our markets and never attend a show. Kick that fire pit suite back to us, let us manage that fire pit suite, and produce a triple-net return for him that averages in that 11%-12% cap rate.

Wes Gottesman (Financial Advisor)

Fantastic. Thank you.

JW Roth (Founder, Chairman, and CEO)

You bet.

Operator (participant)

We will go next, Petit Veruda at Broadcasting Expert.

Hey, JW. I saw you recently announced a partnership with Sands Investment Group to launch the NNN real estate opportunities at Venue. How does this fit into the broader development strategy at Venue? I appreciate your time.

JW Roth (Founder, Chairman, and CEO)

Petit Expert, thanks for calling in. Again, I appreciate your support of all that we do here. I look at it as a way to expand the market of condo or, let's say, fire pit suite owners. Right now, when we started this business, the bulk of fire pit suite owners were owners in the market. As we continued to grow and build our venues, we realized that there were investors across the U.S. that wanted to own these fire pit suites like they would own a triple-net real estate investment outside of the markets where they live. We did a bunch of research.

At the end of the day, Sands Investment Group is one of the best triple-net platforms in the country. We started a conversation with them. At the end of the day, it resulted in us signing a deal with Sands to promote our fire pit suites on their platform. Over the next couple of weeks, you'll see them start to launch these on their platforms. I believe with all my heart that this will become a major way we sell fire pit suites across the U.S. It'll be a big accelerator as we expand our markets.

That's awesome. Appreciate it.

You bet.

Operator (participant)

With no further questions in the queue, that concludes our conference call for today. Thank you so much for your participation. You may now disconnect.