Tickets.com is seeking an undisclosed amount in a new round of funding from strategic and financial partners.
Eric Bauer, chief financial officer of the Costa Mesa-based provider of offline and online ticketing services and software, said the company previously had projected that its cash already in hand would take it to profitability and beyond. The company still is on target to hit profitability by year’s end, Bauer said, but several contract wins,including a deal to provide ticketing for Major League Baseball teams,have required extra spending.
“We subsequently got a whole bunch of new business that would have a huge long-term impact on the company, but would require some up-front spending in terms of building retail outlets for the baseball teams,” Bauer said. “That, if you will, augmented our need. Additional funding, combined with our existing cash position, gets us to cash-flow profitability.”
Company officials were vague about details, but Bauer said a deal would close well before the company runs into a pinch. As of Dec. 31, Tickets.com had about $20 million in cash and equivalents. That’s down from about $37 million as of Sept. 30 and $94.1 million as of Dec. 31, 1999.
“We’re in a pretty good position, partly because we feel comfortable that we have plenty of cash for the time being,” Bauer said. “We’ve already had definitive interest from existing internal partners and outside folks. It’s just a question of seeing what best suits us and pulling the trigger.”
The drop in cash in the fourth quarter was partially due to Tickets.com investing $4 million to improve its technology. The move was initially aimed at serving Tickets.com’s existing business, which includes providing ticketing services for the 2002 Olympic Winter Games and MLB Advanced Media, the interactive company for Major League Baseball. About 15 baseball teams use Tickets.com’s online ticketing services. That number is expected to jump to 27 by 2003. Some of those clubs also license software and use other related services offered by Tickets.com.
W. Thomas Gimple, Tickets.com’s co-chairman and chief executive, said new business wins, such as the Arena in Oakland, also can take advantage of the enhanced software, which offers e-mail event reminders. Soon it will give San Francisco Giants fans the ability to print tickets at home, among other features.
Tickets.com plans to put even more emphasis on technology in the future, especially as it expands. The company has stretched into new markets such as Cincinnati, Pittsburgh, Chicago and Oklahoma City, where it recently won the Myriad Convention Center and other venues.
At the recent Roth Capital Partners 13th Annual Growth Stock Conference, a light-hearted Gimple said that last year was “interesting,” which “in Internet talk meant it sucked.”
Even so, Gimple said Tickets.com gained some ground.
The company’s revenue for the fourth quarter, including software and ticketing sales, was $15.3 million vs. $12.8 million a year ago. The company also reported an operational loss of $14.1 million for the quarter vs. $26.1 million in the year-ago period. Quarterly gross profit jumped 72% from the fourth quarter of 1999 and 27.2% from the third quarter of 2000.
“If you look at the financial trends of Tickets.com over the last four quarters, you’ll see continued margin expansion and you’ll see continued efficiencies relative to the cost side of our model,” Gimple said.
The company sells tickets through its Web site and provides services through the Internet, telephone sales centers, interactive voice response systems and retail outlets. It also licenses software to venues for a fee. Tickets.com drives about 56% of its revenue from ticketing services (including per ticket charges sold on an outsourced basis), 39% from software services (which also sometimes includes per-ticket charges) and about 5% from other channels, including advertising.
Tickets.com has had to look at ways to consolidate the 11 software and regional ticketing companies it purchased over the past three years to try and compete with ticketing giant Ticketmaster. That has meant downsizing from 1,000 employees to 460, reducing call centers and focusing on fewer software systems, among other changes.
“We have to get more and more efficient at running many companies as one company,” Gimple said. “It doesn’t happen overnight.”
Bauer said Tickets.com “unfortunately gets penalized for having a dot-com” in its name. The company’s stock was trading at about 80 cents last week from a 52-week high of 14 3/4.
“The reality is we are a systems and services provider,” Bauer said. “It’s up to us to continue to execute and convince the market and investors that we are different.” n
