TKO Releases Revenue Report for 3rd quarter

TKO Reports Third Quarter 2024 Results

TKO Transaction Highlights

On September 12, 2023, Endeavor and WWE closed the transaction to combine UFC and WWE to form a new, publicly listed company, TKO Group Holdings, Inc. Reported results presented in this earnings release prior to September 12, 2023 reflect only UFC activity.

Third Quarter 2024 Financial Highlights

• Revenue of $681.2 million
• Net income of $57.7 million
• Adjusted EBITDA 1 of $310.0 million

Full Year 2024 Guidance

The Company revised its target for revenue to the upper end of the range of $2.670 billion to $2.745 billion

The Company revised its target for Adjusted EBITDA to the upper end of the range of $1.220 billion to $1.240 billion

The Company reaffirmed its target for Free Cash Flow Conversion 2 in excess of 40%
NEW YORK–(BUSINESS WIRE)– TKO Group Holdings, Inc. (“TKO” or the “Company”) (NYSE: TKO) today announced financial results for its third quarter ended September 30, 2024.

Ariel Emanuel, Executive Chair and CEO of TKO, said: “TKO’s solid third quarter results reflect continued strength across UFC and WWE, particularly in live events and brand partnerships. In light of this continued momentum, we now expect to deliver at the upper end of our full-year 2024 guidance range for both revenue and Adjusted EBITDA.

“Additionally, two weeks ago we announced the authorization of a robust capital return program and an agreement to acquire industry-leading sports assets that will power our profile, give us greater scale, strengthen our position in the sports marketplace, and accelerate returns for shareholders. Just over a year since UFC and WWE came together to form TKO, our conviction in this business is as strong as ever.”

Third Quarter Consolidated Results

Revenue increased 52%, or $232.1 million, to $681.2 million. The increase reflected the increase of $274.7 million of revenue at WWE, to $326.3 million, partially offset by a decrease of $42.6 million at UFC, to $354.9 million.

Net Income was $57.7 million, an increase of $35.7 million from $22.0 million in the prior year period. The increase reflected the increase in revenue partially offset by an increase in operating expenses. The increase in operating expenses primarily reflected an increase in direct operating costs of $76.8 million, an increase in selling, general and administrative expenses of $46.4 million, and an increase in depreciation and amortization of $66.4 million.

Adjusted EBITDA 1 increased 29%, or $70.3 million, to $310.0 million, due to an increase of $153.3 million of Adjusted EBITDA at WWE, partially offset by a decrease of $42.7 million at UFC and an increase of $40.3 million in corporate expenses.

Cash flows generated by operating activities were $236.6 million, an increase of $169.6 million from $67.0 million, primarily due to higher net income and the timing of working capital.

Free Cash Flow 2 was $225.6 million, an increase of $162.0 million from $63.6 million, due to the increase in cash flows generated by operating activities partially offset by an increase in capital expenditures.

Cash and cash equivalents were $457.4 million as of September 30, 2024. Gross debt was $2.736 billion as of September 30, 2024.

UFC

Third Quarter 2024

Revenue decreased 11%, or $42.6 million, to $354.9 million primarily driven by a $50.4 million decrease in media rights and content revenue partially offset by a $10.2 million increase in sponsorship revenue. The decrease in media rights and content revenue was primarily related to holding one less numbered event and two fewer Fight Night events in the current year period as compared to the prior year period. The increase in sponsorship revenue was primarily related to new sponsors and an increase in fees from renewals compared to the prior year period, including the first ever title partner sale made in connection with UFC 306. Live events revenue was essentially flat as an increase in ticket sales related to the mix of event venues and territories was offset by three fewer events as compared to the prior year period.

Adjusted EBITDA decreased 18%, or $42.7 million, to $195.6 million, primarily due to the decrease in revenue (as described above). Expenses were essentially flat as compared to the prior year period. Direct expenses decreased primarily due to lower marketing, athlete costs, and direct costs of revenue due to one less numbered event and two fewer Fight Night events as compared to the prior year period. These decreases were partially offset by higher production costs, primarily related to UFC 306, which was a marquee event held at Sphere in Las Vegas. Selling, general and administrative expenses increased primarily due to higher costs of personnel as compared to the prior year period.

Adjusted EBITDA margin decreased to 55% from 60%.

WWE

Third Quarter 2024

The table below includes WWE’s reported results for three months ended September 30, 2024 and, as a result of the timing of the business combination, the period in 2023 following the acquisition of WWE on September 12, 2023 through September 30, 2023. The following narrative discussion of WWE’s historical information for the three months ended September 2023 also presents WWE information on a “combined” basis for the full quarter by including the period from July 1, 2023 through September 11, 2023. This historical WWE combined presentation is for illustrative purposes and to facilitate an understanding of WWE’s historical operating results prior to the consummation of the business combination (See “Basis of Presentation” for further details.)

Revenue was $326.3 million for the period from July 1, 2024 through September 30, 2024.

WWE revenue was $51.6 million for the period from September 12, 2023 through September 30, 2023. Including WWE activity for the period from July 1, 2023 through September 11, 2023, WWE combined revenue was $287.3 million for the period from July 1, 2023 through September 30, 2023. The increase of 14%, or $39.0 million, was primarily driven by an increase in media rights and content, live events, and sponsorship revenue. The increase in media rights and content revenue was primarily related to the contractual escalation of media rights fees as well as the timing of WWE’s weekly flagship programming, which resulted in an additional event in the current year period. The increase in live events revenue was primarily related to an increase in ticket sales revenue. The increase in sponsorship revenue was primarily related to new sponsors and an increase in fees from renewals compared to the prior year period.

Adjusted EBITDA was $175.3 million for the period from July 1, 2024 through September 30, 2024.

WWE Adjusted EBITDA was $22.0 million for the period from September 12, 2023 through September 30, 2023. Including WWE activity for the period from July 1, 2023 through September 11, 2023, WWE combined Adjusted EBITDA was $102.0 million for the period from July 1, 2023 through September 30, 2023. The increase of 72%, or $73.3 million, was due to the increase in revenue (as described above) and a decrease in expenses. Expenses decreased primarily due to a decline in personnel costs and production costs, principally related to planned cost reduction initiatives implemented following the formation of TKO.

Adjusted EBITDA margin was 54% for the period from July 1, 2024 through September 30, 2024, an increase compared to WWE’s Adjusted EBITDA margin of 36% for the period from July 1, 2023 through September 30, 2023.