管理層發言
Good day, ladies and gentlemen, and thank you for standing by. Welcome to StubHub's Second Quarter 2026 Earnings Conference Call. Operator Instructions: Please note that this conference call is being recorded today, August 12, 2026. I will now turn the call over to Jonathan Schaffer, SVP, Investor Relations with StubHub. Jonathan, please go ahead.
Good afternoon, and thank you for joining us to discuss StubHub's Second Quarter 2026 results. For reference, our second quarter earnings release and presentation are available under the Quarterly Results section of our Investor Relations website at investors.stubhub.com. Before we begin, please note that today's call will include forward-looking statements. These forward-looking statements are based on the company's current expectations and are not guarantees of future performance. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Although the company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can make no assurance related to its expectations. We refer you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. We will also refer to non-GAAP measures on today's call. Unless otherwise noted, our profitability and EBITDA discussions today refer to non-GAAP adjusted EBITDA. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are contained in today's earnings release available on our Investor Relations site. All financial comparisons, unless noted otherwise, are based on the prior year period. Joining me today are Eric Baker, our Founder, Chairman and Chief Executive Officer; and Constance James, our Chief Financial Officer. They will provide prepared remarks before opening the call up to your questions. With that, I'll turn it over to Eric. Eric, you may begin.
Thanks, Jonathan, and welcome everyone joining us today. We delivered a strong second quarter with GMS of $3.1 billion, up 34% year-over-year, and adjusted EBITDA nearly doubling to approximately $106 million. Adjusted EBITDA margin expanded to 18%, an increase of approximately 600 basis points. We also generated healthy cash flow, which enabled us to further deleverage and strengthen our balance sheet. Our results reflect healthy demand for live events, the competitive advantages we've built through the scale of our marketplace, and strong execution by our team. The second quarter once again demonstrated the strength of our marketplace model and the indispensable role of the resale marketplace in the live events ecosystem. Starting with our core resale business, demand for live events remains healthy. Consumers continue to prioritize live experiences across sports, concerts, theater and other entertainment categories, and the 2026 events calendar remains robust. As the market has evolved, the resale market has become an increasingly important part of the live events ecosystem. Fans value flexibility in where they buy tickets and when they make purchasing decisions. The resale market provides liquidity for buyers and sellers while expanding access. Today, StubHub's marketplace brings together more than 1 million sellers with millions of fans around the world. That depth of supply, combined with our technology and marketplace data, allows us to create better outcomes for buyers and sellers alike. Fans choose StubHub because we offer broad selection, trusted transactions and a seamless purchasing experience. Sellers choose StubHub because we aggregate demand at a global scale. We put those advantages to work throughout the second quarter. Our marketplace continued to demonstrate the competitive strength we've built through scale, liquidity and global reach. The World Cup was the standout event of the quarter and a phenomenal proof point of the value StubHub brings to fans in the broader live events ecosystem. The event also demonstrated the increasingly global nature of our business as people traveled from around the world to experience the tournament. Fans from over 150 countries attended matches with tickets purchased through StubHub and approximately 1 in 7 World Cup tickets sold on our platform were purchased by buyers outside the United States and Canada. The World Cup reinforced what we've long believed about the value of a global marketplace. Buyers and sellers benefit from a platform that can efficiently connect global demand with deep liquid supply. This was evident throughout the tournament, providing further validation of our marketplace model. The World Cup created one of the largest and most dynamic ticketing environments our industry has ever experienced. With over 75 matches played over the course of just 2.5 weeks in the second quarter, we navigated unique operational challenges and delivered for fans. We believe that StubHub's ability to manage this complexity at a scale no one else can match is a clear differentiator for us. As with any event of this scale and complexity, a small subset of orders experienced fulfillment issues, and we chose to increase our investment in customer support and fulfillment to address them. As fans ourselves, we understand the disappointment when these issues occur. And from a business standpoint, our interests are aligned with our customers as our marketplace only works when fans attend an event. I'd like to thank our team for successfully executing through such a monumental event. Our objective has always been to take the friction and stress out of accessing live entertainment, and we will continue to invest in customer service, fulfillment and operations to deliver on that commitment. The live events market remains healthy with positive consumer demand, and we anticipate a robust calendar in the second half of the year. Following the significant demand generated by the World Cup, we are watching closely how consumer entertainment spending patterns develop across the remainder of the calendar. Beyond our core resale business, we are also expanding the ways rights holders access StubHub's marketplace. We have discussed our belief that ticket distribution is moving away from exclusive distribution methods toward a more open model. Rights holders increasingly want greater flexibility in how inventory reaches consumers, expanding distribution and improving pricing intelligence and insights. We believe open distribution gives rights holders access to StubHub's global demand and pricing data and gives fans greater choice in where they discover and purchase tickets. Our objective is to make it as simple as possible for rights holders to access StubHub's marketplace. During the second quarter, we expanded our self-service capabilities and broadened category coverage while selectively adding new distribution partners such as the American Conference in the NCAA. These partnerships help us refine our product while demonstrating how open distribution creates value for rights holders of all sizes. We're also making progress with Distribution Manager, our AI-powered self-service platform introduced earlier this year. Since launch, we have onboarded additional venues and festivals looking for an easy-to-use solution to manage and distribute inventory through StubHub. These partners are helping us refine the product while demonstrating how self-service tools can simplify distribution for rights holders of all sizes. It is still early, but we are encouraged by the momentum we are seeing and the opportunity to expand participation over time. Advertising represents another opportunity to build on the engagement across StubHub's marketplace. Sponsored listings provide sellers another lever to compete on the marketplace to sell their inventory, which, by definition, becomes more time-sensitive as an event approaches. It also helps fans discover relevant inventory more effectively. Our focus is primarily on improving option dynamics, increasing available advertising opportunities, refining placement and prominence and expanding access to more sellers while maintaining a fan experience centered on helping consumers discover the right events and tickets. We are in the early stages with sponsored listings. Over time, we expect advertising to become another high-margin revenue opportunity built on the engagement already taking place across our marketplace. Before I conclude my remarks, I want to take a minute to reiterate our view on the regulatory environment, as we recognize it is an area of focus for investors. We share the interest of legislators who are looking to expand fan access to live experiences, making it easier, more transparent and more trustworthy to buy and sell tickets. We believe that experience is only possible through a liquid open market that gives buyers and sellers the most choice. That has always been StubHub's foundation, and we continue to operate within a generally favorable status quo that supports open functioning resale markets across jurisdictions. The secondary market serves foundational needs across the live events ecosystem for fans, for rights holders and for venues alike, and we believe that is why it has proven durable across markets and regulatory environments. As we have discussed in the past, we believe public discussion tends to focus on a certain subset of the resale market. Resellers that list large quantities of inventory on marketplaces for very high-demand concerts at high prices significantly above the original sale price. Based on our internal data, we estimate that approximately 10% of our global GMS in 2025 was attributable to these types of high-demand concert ticket sales by resellers. Recent legislative developments are consistent with our view that regulatory focus is on high-demand concerts, not sports. For example, recently passed legislation in Washington, D.C. which is expected to go into effect in 2027 explicitly carves out sporting events. In addition, certain proposed price caps in other jurisdictions failed to advance during recent legislative sessions. We believe these outcomes reflect policymakers' growing appreciation for the complexity of this issue and the essential role of liquid resale marketplace in the broader live events ecosystem. Importantly, we believe that StubHub's durability is reinforced by our diversification and lack of concentration across sellers, content rights holders, buyers, event types and geographies, providing a level of insulation from potential regulatory changes that may affect any single subset of the market or any single jurisdiction. In closing, we believe the fundamentals of the business continue to strengthen. The live events market is healthy, our platform is executing, and the competitive advantages we've built continue to compound. As a result, we are growing our top line while scaling margins and generating strong free cash flow. We are also expanding the capabilities of our marketplace through open distribution and developing new monetization opportunities like advertising that build on the engagement already taking place across our platform. As we look ahead, we remain focused on disciplined execution, investing in the fan experience, expanding opportunities for rights holders and building on the advantages we've created as we pursue our vision to be the global destination for fans to access live entertainment. With that, I'll turn it over to Constance to discuss our financial results and outlook in more detail.
Thank you, Eric. Good afternoon, everyone. Our second quarter results reinforce the strength of our business model. Consumers continue to prioritize spend on live experiences, and we are meeting that demand with the most innovative technology, data, distribution and supply in the market today. In the second quarter, we delivered against our financial framework, durable GMS growth, margin expansion and strong free cash flow. GMS grew 34% to $3.1 billion, primarily driven by our strong World Cup performance. We realized growth across North America and our international markets, with international again outpacing North America off a smaller base, underscoring the strength of our global platform. We also expanded margins significantly, with approximately 800 basis points of sales and marketing efficiency improvement year-over-year. That was partially offset by incremental investments primarily related to the World Cup. We expect those investments to normalize in the second half and reported margins to reflect the full benefit of efficiency gains we have achieved. In addition, we generated healthy cash flow, funding continued investment in long-term growth while further solidifying our balance sheet and reducing debt, improving net leverage from 4.5 turns at the end of 2025 to 3 turns at June 30. Turning to the income statement. My remarks are on an adjusted basis, excluding stock-based compensation and nonrecurring items. Full reconciliations to comparable GAAP measures are available in our earnings release. Revenue for the second quarter increased 33% year-over-year to $573 million. GMS to revenue conversion was approximately 19%, roughly flat year-over-year, reflecting the World Cup's impact on our overall pricing and catalog mix. Gross margin was approximately 82%, reflecting the World Cup's impact on our payment processing and fulfillment efficiency. As Eric mentioned, we made the decision to increase our investment in the customer experience around the World Cup, given the scale and complexity of the tournament. These costs are not representative of our underlying margin structure. As the event mix becomes more balanced over the course of the second half, we would expect GMS to revenue conversion and gross margins to increase. This has already taken place in the weeks following the World Cup's conclusion. Sales and marketing expenses were 47% of revenue, which represents an approximately 800 basis point improvement year-over-year. Marketing efficiency is one of the most important metrics in our financial model and reflects both improved efficiency at scale and the lapping of a period of accelerated investment in 2025. Importantly, we are achieving this leverage while increasing GMS, demonstrating how our marketplace business can grow while increasing efficiency. Operations and support costs held at approximately 3% of revenue, inclusive of continued investment in customer support, up 32% year-over-year. G&A expenses increased year-over-year by approximately 160 basis points as a percentage of revenue, driven primarily by elevated professional fees related to the evolving regulatory environment and associated legal matters. G&A as a percentage of revenue improved sequentially down more than 200 basis points from the first quarter. Adjusted EBITDA nearly doubled year-over-year to approximately $106 million. And adjusted EBITDA margin was 18%, an expansion of nearly 600 basis points year-over-year. Our growth and marketing efficiency are contributing to a significant margin expansion, some of which was redeployed into the World Cup-related customer support and regulatory advocacy. Net income for the second quarter was $14.6 million. Net income includes $69 million of stock-based compensation expense, which was driven in part by previously announced adjustments to our equity program, as well as nonrecurring items, foreign exchange and derivative gains and losses, interest income and expense and taxes, all of which can introduce variability relative to our adjusted results. We believe adjusted EBITDA helps to highlight trends in our operating results by excluding these items, and the reconciliation to net income is available in our earnings release. Turning to cash flow. Our performance reflects the advantages of our marketplace model. As a scaled asset-light business with favorable working capital dynamics, we generate strong and durable operating cash flow. Because our business is inherently seasonal and individual quarters can reflect meaningful timing-related swings in working capital, we believe trailing 12 months free cash flow is the most appropriate lens through which to evaluate our cash generation. We generated approximately $598 million of free cash flow on a trailing 12-month basis, representing 194% conversion of adjusted EBITDA. This includes $418 million benefit from net inflows of buyer receipts and seller payments as well as approximately $108 million of interest costs. Excluding these items, underlying free cash flow was $288 million, representing a 93% conversion of our trailing 12-month adjusted EBITDA. During the quarter, capital expenditures were approximately 2% of revenue, and we generated approximately $12 million of interest income. We also continue to benefit from approximately $1.2 billion of NOLs. Turning to the balance sheet. We ended the quarter with approximately $1.7 billion of cash and cash equivalents or approximately $490 million net of seller payables. Net leverage improved to 3x trailing 12-month adjusted EBITDA at quarter end, down from 4.5x at year-end 2025, reflecting both earnings growth and cash generation. Our financial position provides meaningful flexibility to execute against our capital allocation priorities. We remain focused on organic investment, continued deleveraging and disciplined dilution management while maintaining the flexibility to pursue opportunities that enhance shareholder value. Subsequent to quarter end, we repaid $100 million of our U.S. dollar term loan, further demonstrating our commitment to deleveraging and our ability to deploy free cash flow toward debt reduction. This follows a $100 million in debt reduction in May and brings the total debt repayment over the last 12 months to $1.1 billion. As a result, our total outstanding gross debt has been reduced to approximately $1.3 billion with no maturities until March 2030. Turning to our outlook. We are raising our full year GMS guidance to a range of $10.1 billion to $10.3 billion, representing year-over-year growth of 10% to 12% versus our prior outlook of 8% to 10%. Our increased GMS outlook reflects our strong second quarter performance. As we look to the second half of the year, it's important to put that growth rate in context. We are taking a disciplined approach to our GMS growth outlook following the concentration of demand for the World Cup. While the World Cup validated our leadership position and the overall health of the consumer for live events, we will continue to monitor consumer spending patterns and will provide additional visibility as the year progresses. With respect to profitability, we are maintaining our full year adjusted EBITDA guidance of $400 million to $420 million, inclusive of the incremental World Cup-related customer support as well as regulatory advocacy costs. Looking forward, we anticipate margin expansion in the second half of the year. In closing, we delivered a strong second quarter characterized by GMS growth, expanding margins and strong free cash flow generation. And with that, we're ready to take your questions. Operator?
分析師問答
Operator Instructions: Your first question comes from the line of Eric Sheridan with Goldman Sachs.
Maybe a two-parter on costs. You saw a lot of sales and marketing leverage in the front part of the year. Can you talk to us a little bit about your philosophy on sales and marketing, the potential for either driving growth in the business in the second half of the year or potentially being an additional source of leverage? And can you talk us through some of the key strategic investments you believe you need to make in the business in the second half that might be reinvesting some of the profitability from the first half back into the business when we think about measuring your second half implied guide against the full year?
Eric, thank you for the question. Appreciate it. Let me give maybe a quick overview before I give it to Constance for some of the details of how the second half plays out and so forth. I think when you talk about it, fundamentally, what we discussed at the beginning of the year was that the objective of 2026 was to continue to grow while expanding our margins and building on our leadership position, and obviously halfway through the year, that's what's happened. I think a lot of that reflects again when you have a marketplace business and you have a leading position, that we now can get leverage in the sales and marketing category, given where we are and capitalize on our leadership position with such strong tailwinds in the event market. But I'll let Constance walk you through a little bit more specifically how we see that playing out for the remainder of the year.
Yes. Thanks, Eric, for joining us today. I think maybe even more broadly, your question comes down to just help me understand what that margin bridge looks like. To your point, our implied guide specifically notes that we will see that level of margin expansion in the second half. First, let me just note a couple of things that did occur in the second quarter, which impacted what I'll call the temporary dampening of what we saw in relation to the margin. You can see that there were some higher direct costs related to the World Cup impacting gross margin. You can see about a couple of points of slight compression versus our typical mid-80% run rate. And then to your point, that was partially offset with tremendous sales and marketing efficiency. As Eric mentioned, we know that once we've reached this clear market leadership position, we would naturally get that operating leverage. So again, really excited with that 800 basis point improvement over the period. As you look into the second half, what I can say is that we do continue to expect to see this efficiency flowing through from sales and marketing providing a benefit, as well as the alleviation of some of those temporary costs subsiding, which allows us to see this clear pathway to margin expansion.
Your next question comes from the line of Mark Mahaney with Evercore ISI.
All right. Maybe on the implied GMS outlook for the back half of the year: it sounds like you want to be a little cautious. It seems you are concerned the World Cup may have pulled demand for live events forward into the first half, but you also say there is a robust slate in the back half. Could you drill into that a bit more? Why aren't we seeing it? It looks like you might even have a negative year-over-year quarter in GMS in the back half of the year—why would that be? And on advertising, could you provide more qualitative or quantitative detail on how that is ramping up, such as number of advertisers, growth rates, dollar amounts, or anything about the revenue opportunity?
Thanks for the question, Mark. I appreciate it. Before I get Constance to get into some more of the specifics around what you asked about, let me first, on the guidance thing, maybe touch briefly on our guidance philosophy and how we think about it, which you sort of alluded to. We're trying to take a very disciplined approach. So we have high conviction and grounding in what we see as we move forward. We're also, I think as we said, always think on an annualized basis over the long haul because in any period of time, things can get moved forward or back, the event calendar, concert onsales can change. I think, as you alluded to, certainly, we think there's a very strong event calendar in the back half, and we know we have a great durable leadership position. That being said, as you did allude to, the World Cup is a very unique situation. We just want to be prudent with our guidance until we really have data on how consumers are spending on events in the period following such a unique extravaganza will play out, and we'll just report on that as we see it. I think your second point, if I recall, is more in advertising. Again, we are very bullish on advertising. We remain very committed to that, particularly around sponsored listings. We are in a phase, as we've said, where we're just trying to perfect the product and get it right before we can really roll it out in a big way. So we're testing and learning from a subset of customers. We're trying to really optimize the auction mechanics, the pricing, the conversion rates, the user experience. And we're keeping a high bar that we want to be additive to what the consumer sees. So it's very attractive. We believe sellers of time-sensitive inventory are responding well to it. That being said, I appreciate your patience with us. As I've said before, we're really focused on just getting it right before we'll be in a position to share more metrics on how it's going. So with those two overviews, I'll hand it over to Constance.
Yes. I just echo what Eric mentioned in terms of GMS outlook. We continue to be very grounded and disciplined as we think about putting a guide out there. The World Cup was a marquee event. We know that there is a potential for some level of shift in consumer spending patterns. What I'd say is the data that we have today is too early to read and really draw any level of conclusion. What we know is there's a healthy event calendar out there. And whenever and wherever that demand does come to fruition, we'll be right there to capture it. In addition, in terms of advertising, I would say, we've said previously that we expect that in the tens of millions of dollars in relation to revenue for the full year. That continues to remain. As Eric mentioned, this year is really focused on the fundamentals and getting it right. So excited about the longer-term opportunity.
Your next question comes from the line of Doug Anmuth with JPMorgan.
Can you quantify the impact of the World Cup in 2Q and perhaps even just how you're thinking about it for 3Q on GMS? And then much more importantly, how are you thinking about kind of the longer-lasting effects and kind of benefits in terms of customer acquisition? And then also just given some of the customer experience challenges as well.
Thank you for the question, Doug. Let me respond with how I think about the World Cup at a high level, and then Constance can elaborate on anything financial. The World Cup performed at the high end of our expectations for the event. We think it was a great validation of the critical role that resale plays within the broader ticketing ecosystem. And it really, we think, further solidified StubHub as the global destination that people from all over the world came to use and demonstrated the passion they had. The first thing when we step back and look at it is the event was an extremely positive experience for the overwhelming number of fans who used our service and whom we were able to deliver to those games to see the matches. That being said, there was a small subset of fans who did not have the experience they wanted and required refunds, and that is unacceptable to us. Operationally, it was a very complex event because there were 75 events taking place in just two weeks in the quarter, and the ticketing system put in place by the event organizer was bespoke and added an additional layer of complexity. While we are proud of the fact that we were able to deliver for the overwhelming number of people, we understand that complications do not take away from the disappointment of someone who did not get the ticket they wanted. We run a consumer marketplace, and we have to earn people's trust to transact with us every day. Even one refund is one too many. We made a lot of investments during the World Cup period, which were unique and one-time to the World Cup, to further support fans and minimize problems. We are not perfect, and we have to strive to be perfect. We owe it to every customer to do that, but we are proud of what we were able to accomplish. With that, I'll hand it over to Constance.
Thanks, Eric. I'll put a couple of finer points on some of your questions. In relation to the specific contribution, a key driver of the second quarter was the World Cup, and we're not breaking it out specifically because we manage the business holistically and our job is to capture as much demand wherever and whenever it shows up. That said, as the event materialized, it was important that we had an exceptional customer experience, and we were proactive about creating incremental investments to help eliminate friction. You'll see some of that showing up in the gross profit line, as I mentioned, slightly compressed during the period. In relation to the third quarter, again, the World Cup was a great event, and when marquee events occur, we're very well positioned given our structural advantages as the market leader and our global reach to show up. We're pleased with the event and the financial performance that was a result.
Your next question comes from the line of Justin Post with Bank of America.
Great. I'll ask on the direct business. Any wins to highlight over the last quarter or two that could really move the needle for direct distribution? And how does the pipeline of potential partners look right now?
Thank you for the question, Justin. To level set, open distribution means giving content rights holders access to StubHub's buyer base and distribution infrastructure on a nonexclusive basis at no charge. They can get access to our deep liquidity pool, real-time data, and fan demand tools without having to build anything themselves or give up their primary ticketing relationships. As we've continued to push on this, we're excited about the progress in building the infrastructure that enables rights holders to connect with buyers in our pool at scale. We have selectively formed partnerships, some of which we've announced, like the American Athletic Conference and NCAA, to help iterate and improve the product offering. In 2026, we're focused on getting the product right from a product perspective and working with the partners we have, rather than pursuing broad expansion prematurely. We appreciate your patience as we will announce more when the time is right.
Your next question comes from the line of Brian Pitz with BMO Capital Markets.
Thanks for the question. On GMS growth, any insights into ticket volume growth, average ticket price increases or mix shifts across sports, concerts, festivals and other categories? And then as a follow-up, maybe just on stock-based compensation, it definitely increased significantly in '26. How should we think about the ongoing run rate of equity compensation and its impact on dilution as we go forward?
Sure. I'll give a high-level setup. On GMS growth, we focus across the board. As demand for live events increases and more events come online, you get volume and benefit of price as well. The World Cup was at the high end of our expectations, but the rest of the business performed broadly in line with expectations. We're very positive on live events over the long term. On stock-based compensation, some of the increase this year relates to a one-time readjustment after the IPO. That creates some near-term net dilution for this year, but it's not something we expect to meaningfully affect the recurring run rate going forward. Our aim is to generate more free cash flow per share over the long term — generate more cash and ideally reduce the share count over time. I'll hand it to Constance for more detail.
I'll add a couple of points. In relation to price versus volume, there can be shifts between the two in any period. We think about it on an annualized basis. There was some elevation in price in the period, given the World Cup, but we have a diversified catalog and scale. Regarding share-based compensation, people are central to value creation, and equity remains an important component of competitive compensation. Post-IPO, share-based compensation has been elevated. Our approach is ensuring that dilution is no greater than low single digits. In the near term, we've mentioned that for the full year we expect dilution to be in the low to mid-single-digit range. We're on track to stay within that. Fundamentally, what we care about is free cash flow per share as a metric that creates long-term shareholder value.
Your next question comes from the line of Shweta Khajuria with Wolfe Research.
Can I please ask a couple? One is, when you think about the demand trends in the U.S. versus international, could you characterize what you're seeing? And how is the demand in the U.S. versus perhaps discretionary spend demand in the international markets? Second, any update on the regulatory environment? There was a little bit of noise around scalpers, StubHub perhaps potentially funding scalpers. Is there anything you want to clarify here? That would be helpful.
Sure. On international versus domestic, our business continues to be strong across the board. Live events are a consistent theme and consumers appear resilient in their demand for live events in many countries because that is what they want to do. On regulatory matters, thanks for the question — it's an area with lots of questions. We're a fan-first platform and have always advocated on behalf of fans for access. Regulators generally want to provide benefits to consumers around convenience, fraud protection and access to sold-out events, and where we can explain our position, we often find alignment. Resale is legal in most jurisdictions, and we operate in a broadly supportive regulatory environment. There has been talk about price caps. Price caps are rare today and generally don't work well for consumers; they can encourage black markets and are impractical to enforce given primary market dynamic pricing. Much of the regulatory focus tends to be on the extreme top end of the market for very high-demand concerts where professional sellers may resell at high markups. That surface of our business represented about 10% of our global GMS in 2025. If policy changes targeted that surface, it would affect a limited portion of our business, and there would likely be substitution. Regarding specific developments, Washington, D.C. passed a Resale Act that is expected to go into effect in 2027 and explicitly carves out sporting events, focusing on concerts. That affects only that subset and a very small market. In the U.K., proposed measures did not make it into the King's Speech. In New York, price cap proposals did not pass. These outcomes reflect that policymakers are considering the complexity and the role of liquid resale markets. We engage where necessary and seek to make the case that measures which limit resale broadly are not fan-friendly. I hope that helps frame where things currently stand so you can assess the potential surface of regulatory risk.
Your next question comes from the line of Jed Kelly with Oppenheimer & Co. Inc.
Great. Just talking about the second half, would it be fair to say you're kind of layering in some conservatism, given that if we look at the second half by some other companies in the consumer services sector, Live Nation and some travel companies are talking to stable to decent demand. Can you help with the 3Q and 4Q cadence between GMS, EBITDA, and revenue?
Thank you for the question, Jed. Our guidance philosophy is to be disciplined and grounded so we have high conviction in what we deliver. We think on an annual basis and acknowledge that there can be pushes and pulls across a year. The World Cup is a unique, one-of-a-kind event and may have pulled forward some demand; we want to be reasonable and not get ahead of ourselves in guidance. Constance will explain the P&L items that drive the cadence of GMS, EBITDA, and revenue for the back half.
I'm happy to build on that. It may be useful to step back and give context on profitability and phasing. A couple of points from the second quarter impacted temporary margin compression: higher direct costs related to the World Cup and slightly elevated G&A from professional services. The second quarter gross margin was about 82% versus our typical mid-80% blended gross margin. Those temporary compressions were driven by event-driven pricing dynamics and incremental investments in the consumer experience. Now that we've moved past the World Cup, the GMS to revenue conversion has increased, and we're seeing gross margins return to the more structural mid-80% rate. Combined with continued sales and marketing efficiency, we expect to see margin expansion in the second half. We do not provide quarterly guidance, but this context should help you model the expected phasing.
Your next question comes from the line of Ryan Sigdahl with Craig-Hallum Capital Group.
Eric, Constance, maybe staying on that guidance question. GMS guidance implies low single-digit growth in the second half, despite you having World Cup benefit still in July and an easy Q4 comp. You have said international remains strong. If we assume all that, it implies North America GMS is flat to down, which doesn't make a lot of sense to me, relative to everything you're saying. Any finer point you can put on that would be helpful. And a second question: for the one-time customer support investment around the World Cup, how much of that was proactive and planned versus reactionary to some well-publicized issues? One of your peers cited 99.7% successful fulfillment on World Cup orders. Are you willing to quantify?
Thank you, Ryan. Our business will continue to grow, margins will continue to expand, and we'll continue to generate cash while maintaining our leadership position. On the World Cup, it was a very complicated event with a complicated ticketing system. We anticipated complexity and invested proactively in customer support. Even if fulfillment is successful for the overwhelming majority, until we reach 100% there will be customers who are disappointed, and that gets attention. We take that very seriously. Some of the expenses incurred were proactive investments to prepare for complexity, and some were reactive as issues arose; given the size of the event and the bespoke systems, those costs were unique to this event. We aim to drive fulfillment issues to zero and will continue to invest and improve operations. Constance can add more perspective on how that impacted the financials.
Thanks, Ryan. On the specific contribution of the World Cup to the quarter, we don't break that out because we manage the business holistically. We focused on ensuring an exceptional customer experience and were proactive about creating incremental investments to reduce friction. You'll see those investments affecting gross profit during the period. In relation to the third quarter, the World Cup was a strong event, and we're well positioned to capture demand when it materializes given our scale and global reach. We're pleased with the financial result, and we expect the one-time investments to subside.
Your next question comes from the line of Andrew Boone with Citizens.
I wanted to ask about the potential for a baseball strike as we think about next year. Historically, do you see a mix shift with consumers switching to concerts, or is that demand entirely lost? How should we think about that as a risk? And going back to marketing efficiency, you had a large influx of a new cohort for the World Cup. Can you talk about keeping them on the platform and increasing repeat rates organically? How are you thinking about increasing direct sales as it relates to bringing these customers back?
Thanks for the questions. I don't have a crystal ball on labor negotiations, but the key for us is our diversified book of business. If a sport experiences disruptions, consumers often spend elsewhere on live events. We remain confident in long-term demand for live experiences. On marketing efficiency and retention, when you achieve leadership and scale in a marketplace, you gain leverage across channels, become more effective at converting customers, increase direct engagement, and improve repeat behavior. We're focused on improving those dynamics and expect the benefits to show in ongoing results. We aim to prove this through execution and results over time.
At this time, we have reached the end of our Q&A session. I would now like to turn the call back to Eric Baker, Founder, Chairman and CEO, for closing remarks.
Thanks again, everyone, for joining us today. We delivered record GMS and revenue performance in the second quarter. Consumers continue to prioritize live events, and our second quarter results demonstrated the strength of our leading marketplace model. We look forward to executing on our business priorities in the second half of the year. Thanks again, and have a great night.
This concludes today's call. Thank you for attending. You may now disconnect.