STUB Q2 2026 - Post-Call Earnings Update
Verdict
- The guidance gap was explained, not closed: full-year gross merchandise sales went to $10.1–10.3bn (+10–12%) from +8–10%, while adjusted EBITDA stays at $400–420m — management said the unchanged EBITDA range already absorbs incremental World Cup customer-support and regulatory-advocacy spend.
- Margin compression was framed as temporary: gross margin of roughly 82% against a stated "mid-80%" structural rate, with management saying conversion and gross margin have already returned toward the mid-80s in the weeks since the tournament ended.
- Free cash flow was cut down to size on the call: trailing-twelve-month free cash flow of $598m, 194% of adjusted EBITDA, becomes $288m and 93% conversion once $418m of buyer-and-seller float and about $108m of interest are stripped out.
- The one thing that matters: three separate analysts pressed on a second-half GMS guide that implies low-single-digit growth after +34% in the quarter — one put it as North America flat to down — and management declined every time to say whether that is conservatism or an expected post-World Cup air pocket, answering only that the data is too early to read. The deceleration is now explicit and still unexplained.
Consensus scorecard
| Metric / basis | Quartr actual | API Ninjas consensus | Beat/Miss | Beat/Miss % |
|---|---|---|---|---|
| Revenue (total revenue) | $573.1m | $513.3m | Beat +$59.7m | +11.6% |
| EPS (GAAP diluted, attributable to common stockholders) | $(0.00) | $0.11 | Miss -$0.11 | -100.0% |
Guidance & KPIs
| Item | New on the call | Prior guide | Prior-year actual |
|---|---|---|---|
| FY2026 gross merchandise sales | $10.1bn – $10.3bn, +10–12% | +8–10% | Not restated |
| FY2026 adjusted EBITDA | $400m – $420m, held, inclusive of World Cup support and regulatory advocacy costs | $400m – $420m | Not restated |
| Gross margin | Back to a "mid-80%" rate in the weeks after the World Cup | Not previously guided | ~82% in Q2 2026 |
| Sales & marketing | 47% of revenue, ~800bp year-over-year improvement, efficiency expected to persist | Not previously quantified | Not separately disclosed |
| FY2026 advertising revenue | "Tens of millions of dollars", reiterated | Tens of millions of dollars | Not disclosed |
| FY2026 share dilution | Low-to-mid single digit, with a low-single-digit near-term target | Low single digit | Not disclosed |
Management commentary
- CFO Constance James bridged cash flow for the first time: the $598m trailing-twelve-month figure includes $418m of net buyer-receipt and seller-payment inflows and roughly $108m of interest costs, leaving $288m of underlying free cash flow at 93% conversion.
- G&A, up about 160bp as a share of revenue year over year but down more than 200bp sequentially from Q1, was attributed to "elevated professional fees related to the evolving regulatory environment and associated legal matters."
- CEO Eric Baker sized regulatory exposure at roughly 10% of 2025 global GMS — professional resale of high-demand concert tickets — noting the Washington DC RESALE Act takes effect in 2027 and carves out sports, while UK and New York price-cap proposals did not advance.
- Management twice declined to quantify the World Cup: no GMS or revenue contribution was broken out, and when an analyst cited a peer's 99.7% fulfillment rate, Baker gave no comparable StubHub figure.
- After quarter end the company repaid another $100m of term loan, taking gross debt to about $1.3bn with no maturities until March 2030, against $1.2bn of NOLs and roughly $490m of cash net of seller payables.
Quality of earnings
- Headline cash generation is roughly half of what it looks like. Trailing-twelve-month free cash flow of $598m converts at 194% of adjusted EBITDA only because of $418m of float; on management's own underlying basis it is $288m and 93%.
- Stock-based comp is most of the gap between $105.7m of adjusted EBITDA and $14.6m of net income. The call put share-based compensation at $69m for the quarter, driven partly by post-IPO equity-program adjustments, with full-year dilution guided to low-to-mid single digits.
- The margin dip is a cost decision, not a pricing failure. Roughly 800bp of sales-and-marketing efficiency was partly offset by World Cup direct costs holding gross margin at about 82% and by about 160bp of higher G&A, with operations and support at 3% of revenue but up 32% year over year.
Gotchas & watch items
- The second-half GMS guide implies low-single-digit growth after +34% in Q2, and management neither confirmed nor rebutted an analyst's reading that it implies North America flat to down.
- Adding two points to the GMS growth guide while holding adjusted EBITDA at $400–420m means the incremental volume is guided to drop nothing to the bottom line; the World Cup support and regulatory costs blamed for that were never sized.
- The World Cup contribution was explicitly not broken out, so there is no disclosed basis for what Q2 GMS or the 18% adjusted EBITDA margin looks like without it.
- The 10% regulatory-exposure figure is management's own estimate from internal data, and Baker added that even that share would not fully disappear under a price cap.
Event: https://web.quartr.com/companies/21381/events/668322/overview Retrieved: 2026-08-12T22:11:00Z Comparison mode: maximal · Scorecard contract: v1 The company does not break out the World Cup, so no figure here can be adjusted for it.