Race Registration Market Analysis

We usually do a Race Registration Market Analysis twice a year – March and September. This is an unusual year, but we did a special one in April, 2020 to try to capture what was happening in the endurance market. We usually include a bunch of stats from different sources to compare the various registration platforms and track general industry trends.

This analysis will use a bunch of internal RunSignup data to try to extrapolate what is happening generally. We will also make a number of observations and give our opinions on a number of areas of general interest to the endurance community.

Transaction Volume

The above graphs show what has happened to transaction volume on RunSignup since February.

Keep in Mind: Before March 7, we were up about 29% over the previous year since Jan. 1. At that time, the endurance market was relatively flat in terms of growth – we were seeing a minor increase in participation of about 2% that we reported in our 2019 RaceTrends Report, and RunningUSA reported a decline of 2.7%. So we were continuing to take a fair amount of market share, having grown paid registrations from 5 Million in 2018 to 6.2 Million in 2019. That means that the numbers above as well as the stats we will share below may not be reflective of what is happening to other registration vendors or to individual race organizations.

When shutdowns began, RunSignup’s transaction volume was down about 80%. Our transaction volume has gradually crept up over the months. Recently we have been down about 20% on a year over year basis:

We are fortunate as a business to have been able to keep all of our employees, and we even added 3 new reps (our first GiveSignup reps – more on that below). We have eliminated a number of expenses, but can pay our employees fully and break even at a transaction volume around $5M per week. We expect to see similar transaction volumes through the end of November.

Virtual Races and Challenges

Many of our customers are finding success with virtual races and challenges, as illustrated in the chart above. We think both will continue to be viable revenue streams for races and nonprofits. We are seeing larger organizations, who were initially leery of virtual, opening up creative alternatives. We have held a number of group sessions with large race organizations over the past 6 months and are seeing the shift happen. Every organization is experiencing difficult financial situations forcing furloughs and layoffs, with the realization that 5,000+ person events, much less 40,000 person events, will be difficult to organize for quite a while.

RunSignup has benefited greatly from having a good foundation in virtual race technology pre-COVID (like virtual txt bot, RaceJoy, and a number of multi-thousand person virtual races on our platform pre-pandemic). But our quick pivot to innovate and create leadership technology in virtual and in challenges has brought us many new customers. In addition, some of our base technology like real websites for every event that host custom content, allow custom URL’s, and feature beautiful cover pages without having to hire outside contractors or agencies is letting customers reduce their costs.

New and Renewed Races

We shared new and renewed race totals in April that showed the dramatic drop in new and renewed races during that first 6 weeks of the pandemic. These numbers have improved drastically for us.

Renewed races are the red line below, and were up before March 7, and then dropped dramatically. They have only started to return to about 200 renewed races per week recently. This is a combination of some smaller races actually going live, as well as some races renewing, but switching to a virtual format.

New race volume has been up dramatically for us since April, and seems to be growing even more the past month or so. There are three sources:

  • Existing races not renewing, but creating a new special event like a challenge.
  • Races moving from other platforms that do not support the deep virtual and challenge tools that help differentiate their events.
  • Nonprofits being attracted to the concept of a virtual fundraising 5K or challenge as a method to raise funds now that other alternatives like galas are cancelled.

As mentioned in our August report, our total number of races created and renewed, as well as the number of new payment accounts (741 new customers in August) are both up about 20% overall from a solid 2019.

Chargebacks, Merchant Reserves and Payments

One of the hot topics in March, which we kind of led, were merchant reserves and the fear of chargebacks. We initially set a 20% reserve requirement, but have since lowered that to 5% (Eventbrite is still holding 100% of funds until after events occur, and new event based customers on Stripe have reported reserve requirements as high as 75%). Chargebacks have been under control and it looks like RunSignup will lose less than $100,000 as the underwriter. This is fairly amazing considering we had paid out over $75 Million to races that had not yet happened as of March 13. Races have refunded over $10 Million, and much of the rest of that $75 M has been delivered via virtual races, while about another $10 M has been deferred to races in future years.

The one thing we will note is that a number of the new customers that have come to our platform have come because of irregular and delayed payments from their vendors. We do not think this is because of high chargebacks, but more because some vendors are not set up as payment facilitators like us and co-mingle customer and company funds and are using the float to fund operations while they are losing money. This is of course a risky strategy.

Web Traffic

This is one area that we can use the data from past market analysis with the Alexa Rank data. This approximates the rank of a website compared with others in the US. Here is the complete list updated with a sort by current rank from September 6:

This has become a real eye chart because of how long we have been collecting the data, but historical context is useful. Haku is the only one that is up. That might be because they are hosting both the Chicago and Boston Marathon virtual signups and experience. RunSignup has the second least amount of impact in Alexa rankings, down via rank by 24% (although our traffic is up by 24% – see below). Race Roster is down 51%. Active includes the Active Community business, which is much larger than the Active Endurance business so it is difficult to understand those numbers.

It is amazing how so many names that were leaders or at least familiar have fallen into unmeasurable territory. It will be interesting to see which ones will survive the pandemic:

Let’s use RunSignup pageview data again to set some real numbers in place:

For the past 30 days, our pageview traffic increased 24% to 20,604,000, while our rank from last September fell by 24%. This is probably due to the increased traffic of people on the internet.

Race and Nonprofit Organization Observations

We are in a unique position to collect feedback from our large customer base on a daily basis, as well as from our 5,000+ person Symposium, our 600+ person Fall Cram session, and the dozen members of our Customer Advisory Board (we held a CAB meeting two weeks ago).

It is amazing how many organizations are downsizing and reducing expenses to try to match their decreased revenue. It is casting a shadow of gloom across many people in the endurance and nonprofit communities. And it seems like no one is immune – including the largest race and nonprofit organizations laying off employees.

On the positive side, we are seeing an increased amount of energy to find new ways to generate revenue. This is reflected in the numbers you are seeing above. During the March-April timeframe people were frozen in place – shell shocked. Then there was a period of either denial or the thought things would be fine in the fall (now it is people who think things will be fine in the Spring). This caused delay in taking actions.

What we are seeing now is a growing sense of action. The endurance and nonprofit communities have an enormous wealth of creativity and passionate people. There are also dedicated supporter networks of past participants, donors, fundraisers, volunteers, members, and sponsors who want to see these organizations recover and thrive.

One timer on our Customer Advisory Board shared how they had discussed in March and April whether this was a time to get out of the business after nearly 20 years of success, but with a train wreck of 300 races looking like they would cancel in 2020. They pivoted to virtual and challenge events – both their own and helping their customers switch. This has given them the cash flow needed to survive. Their expectation is similar to our own, which is once the dust settles in 2022 and beyond, there will be a whole new set of growth opportunities. These will be from a combination of fewer competitors, as well as from new events that will emerge.

Industry Observations

Some comments on the above data combined with general market awareness on some of the above vendors.

RunSignup | GiveSignup – As we reported in our Q2 Numbers, we put together a strategy of keeping all of our employees while maintaining break even profitability. From Mid March – Mid April, this caused a 50% pay rate for everyone. With the PPP money and increase in business we were able to pay full salaries from mid April until August. The first paycheck of August was at 75% and the second (most recent) was at 85%. It looks like we will be back to 100% pay through the end of November.

We have been fortunate to be the early leaders in shifting to virtual and challenge, and have leveraged our innovation stack to gain market share.

In addition, as stated above, we have seen a large increase in new customers. While we have seen customers move to us from most of the vendors mentioned below, many of these are in the nonprofit sector. We wrote in July about taking “Our Shot” with GiveSignup. Our strategy is to continue to capture market share in both the endurance sector as well as with nonprofits during the next year+ while many of our competitors are slowing down their development pipelines and scaling back their customer support.

Eventbrite – They announced their Q2 numbers. While they have seen a massive switch to virtual, they have still seen their transaction volume decrease by 82% over the quarter. However, they have been gradually improving with July down about 75% from the previous year.

Eventbrite publicly reported a 45% reduction of staff in April. There have been reports of layoffs in the endurance industry from Active, Enmotive, IMAthlete, BikeReg, Stack/GetMeRegistered, and others. Clearly, every organization is trying to figure out the balance between revenue and expenses.

Race Roster had 260,000 registrations according to the Asics quarterly report as compared with 1,020,879 on RunSignup. It is hard to understand what that count was as they referenced that only 40% were paid. From looking at LinkedIn, most of their people are still there so it seems they still have support from Asics although they are likely losing money. And it will be interesting to see if Asics will need to make their own cost reductions since they lost $50M in Q2. Of note, Lennie Kwan, who was their lead on CRM strategy and a big Salesforce advocate, has left the company for Klick, which is a marketing firm.

Haku continues to do a solid job with building custom solutions for the high end of the market, winning the Boston Marathon. It will be interesting to see how the next year plays out in terms of customers being able to afford their custom solutions and whether they get to scale the business in that narrow market. As we have pointed out in the past, the Top 100 races only have about 2 Million participants per year. Unfortunately they do not share much information publicly, but they will be an interesting company to continue to watch.

Enmotive was acquired by Gannett last year, and then acquired IMAthlete. It looks like they are going with Enmotive as their strategic platform given the large drop in the IMAthlete traffic. They face a similar question to Race Roster; however, Gannett faces a lot more financial pressure as the newspaper industry is going to have a difficult time recovering, and they carry $1.6B of debt on their balance sheet with a market cap of only $250M for the 250 newspapers they own. They have recently sent out press releases talking about their strategy of being a turnkey solution that includes marketing and fulfillment, although they do not seem to be making much progress in terms of the technology solutions they are bringing forward for virtual races and challenges. They are also leveraging their in house events business like Hot Chocolate and Rugged Maniac and the events owned by Gannett. It is difficult to be a technology vendor as well as event operator, marketing firm, fulfillment house, and newspaper company.

Similarly, it seems Stack has decided that GetMeRegistered is their strategic platform over RaceWire from the drastic drop in RaceWire traffic and the relatively lower drop by GMR. GMR is faced with the issue of changing management, and an old technology base. We hear rumblings of delayed payments and unhappy customers. There are customers who are moving from GMR to RunSignup that account for more than 50,000 registrations per year, Haku has won Beyond Monumental and Race Roster has won another customer. And there are a number of customers who are in the process of moving. So in addition to the lower volume during the pandemic, they seem to losing customers at a faster rate than most.

Bikereg has done a good job of recovering. They are still the only other registration platform that has put out a sales tax solution, while many of the others accumulate a liability on their balance sheets. They also put out a decent challenge software solution recently. They are also seeing some regional and smaller events take place. They are a good company and group of people and we hope for the best for them.

The other vendors already had challenges in terms of not having enough critical mass to develop enough competitive technology. The drop in revenue which is likely to last another 12+ months will put a lot of stress on these smaller vendors. There is likely to be more customer migration to the larger vendors, which will exacerbate their revenue shortfalls.

Summary

The endurance community is adapting to these challenging times. As the transaction volume indicates, our customers are being creative with the technology platform we continue to build and enhance. This is imperative, as COVID will hang as a dark cloud in 2021 even if there is a vaccine.

There will be reductions in the vendor community, as smaller vendors will not be able to afford building the technology needed for customers to adapt.

You will see RunSignup | GiveSignup continue to find creative ways to invest during these difficult times to make sure we are offering the best ways for our customers to make money and save money.

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