Notes from TKO Group’s 2024 Fiscal 1st Quarter Report

TKO Group held an investor’s meeting on Wednesday discussing the results from their fiscal 2024 first quarter report.

In regards to revenues, TKO generated $629.7 million in net revenues for the fiscal quarter with the split being $313 million from UFC and $316.7 million from WWE.

TKO generated a net income loss of $249.5 million for the fiscal quarter. It was stated that the main reason for the large net loss was due to TKO’s settlement of UFC’s anti-trust lawsuit during the fiscal quarter.

In regards to other financial areas, TKO’s Adjusted EBITDA for the fiscal quarter was $282.2 million. WWE’s media rights and content revenue for the fiscal quarter was $221.1 million. WWE’s live events revenue was $50.2 million, sponsorship revenue was $13.8 million, and consumer products revenue was $31.6 million for the fiscal quarter.

Official press release:

TKO Transaction Highlights

On September 12, 2023, Endeavor and WWEclosed 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.

First Quarter 2024 Financial Highlights

* Revenue of $629.7 million
* Net loss of $249.5 million
* Adjusted EBITDA1 of $282.2 million

First Quarter 2024 Operational Highlights and Recent Developments

UFC held 11 events, including five with live audiences, that consistently delivered strong viewership and attendance and set several all-time records for gross revenue at the respective arenas

In April, UFC 300 was one of the most successful and highest-grossing events in UFC history with a gate of $16.5 million and attendance of 20,067 at T-Mobile Arena in Las Vegas.

WWE held 47 events, including two premium live events. Each WWE premium live event (Royal Rumble and Elimination Chamber) delivered all-time records for gross revenue and viewership for the respective event

WWE entered into a long-term media rights agreement with Netflix for Raw beginning in January 2025; subsequently, WWE entered into a $25 million domestic media rights agreement with NBCUniversal for Raw to remain on USA Network for the fourth quarter of 2024

In April, WrestleMania XL was held at Lincoln Financial Field in Philadelphia over two consecutive nights in front of a combined 145,298 fans. WrestleMania XL was the highest-grossing event in WWE history, increasing 78% as compared to the previous record set at WrestleMania 39. Prime Hydration, the exclusive “Official Hydration Drink Partner” of WWE, became the first partner to ever appear on the center of the WWE ring

TKO reached an agreement to settle all claims asserted in both UFC antitrust lawsuits for an aggregate amount of $335 million. The settlement is payable in installments and is anticipated to be deductible for tax purposes

Full Year 2024 Guidance

The Company increased its target for revenue to $2.610 billion to $2.685 billion

The Company increased its target for Adjusted EBITDA to $1.185 billion to $1.205 billion

The Company revised its target for Free Cash Flow Conversion2 to in excess of 40%

NEW YORK–(BUSINESS WIRE)– TKO Group Holdings, Inc. (“TKO” or the “Company”) (NYSE: TKO) today announced financial results for its first quarter ended March 31, 2024.

“TKO is off to a strong start in 2024 with multiple record-setting live events, new brand partnerships, and media rights deals for WWE Raw,” said Ariel Emanuel, Executive Chair and CEO of TKO. “With our momentum in the first quarter and solid financial results, we have raised our full year 2024 guidance. We also reached an agreement to settle all claims asserted in both UFC antitrust lawsuits. These positive developments, along with the strength in our underlying businesses, give us more conviction than ever in the combination of UFC and WWE, and in TKO’s ability to deliver sustainable long-term value for shareholders.”

First-Quarter Consolidated Results

Revenue increased 105%, or $323.0 million, to $629.7 million. The increase reflected an increase of $6.3 million at UFC, to $313.0 million, and the contribution of $316.7 million of revenue at WWE.

Net Loss was $249.5 million, a decrease of $337.4 million from net income of $87.9 million in the prior year period. The decrease reflected an increase in operating expenses partially offset by the increase in revenue. The increase in operating expenses primarily reflected an increase in selling, general and administrative expenses of $475.6 million, an increase in direct operating costs of $111.8 million, and an increase in depreciation and amortization of $91.9 million. The increase in selling, general and administrative expenses included a legal settlement of $335.0 million related to a UFC antitrust matter.

Adjusted EBITDA1 increased 63%, or $109.6 million, to $282.2 million, due to an increase of $8.8 million at UFC and the contribution of $140.2 million of Adjusted EBITDA at WWE, partially offset by an increase of $39.4 million in corporate expenses.

Cash flows generated by operating activities were $59.3 million, a decrease of $10.4 million from $69.7 million, primarily due to lower net income and the timing of working capital.

Free Cash Flow2 was $27.8 million, a decrease of $37.3 million from $65.1 million, due to the decrease in cash flows generated by operating activities and an increase in capital expenditures, which was primarily related to WWE’s new headquarter facility.

Cash and cash equivalents were $245.8 million as of March 31, 2024. Gross debt was $2.752 billion as of March 31, 2024.

Other notable highlights from TKO’s investor meeting:

• TKO Group CEO Ari Emanuel praised WWE’s live events for the fiscal quarter and brought up WWE’s Elmination Chamber 2024 event in Australia, Royal Rumble 2024, and their 17 shows sellout streaking leading to WrestleMania 40. Emanuel stated that the attendance records set by WWE during this past fiscal quarter speak to the local benefits they bring to those areas.
• On the topic of WWE’s sponsorship deals, Emanuel stated that the team who worked on ring mat sponsorships and new sponsorship deals in UFC are now working in WWE for their live events deals.
• On the topic of WWE RAW, they stated that they had secured a new short term deal with NBC Universal and USA Network to keep RAW on USA Network through the end of 2024.
• On the topic of WrestleMania 41 taking place in Las Vegas, TKO CFO Andrew Schleimer stated “As we have stressed, site fees are a key area of focus for us. This event includes a meaningful payment, as well as other cash and non-cash incentives.“
• In a follow-up statement later in the media call, Schleimer stated that WWE’s Elimination Chamber 2024 event in Australia this past February brought in the highest site fee ever for a non-Saudi Arabia international premium live event in WWE history.
• On the topic of TKO potentially expanding beyond WWE and UFC through additional acquisitions, TKO President Mark Shapiro stated that they were interested in MotoGP dating back to the Endeavor days and they’ve “danced with them” over the years in terms of a potential purchase deal. Shapiro stated that while it fits with WWE and UFC in terms of running almost the entire year, MotoGP decided to go to Liberty Media in the end.
• On the topic of if WWE wanted to distance themselves from Saudi Arabia following Vince McMahon’s resignation and the potential of TKO holding additional events in Saudi Arabia, Shapiro stated “Let’s remember, we have a strong and healthy relationship with the Kingdom, through WWE, and doing two annual events a year. I’ll remind folks that those deals were primarily highly tied to Vince McMahon. There was a lot of speculation with Vince being gone, ‘would that impact the relationship in a negative way? Would they be looking to get out of it?’ I would say that Nick Khan, in particular has developed, sustained, cultivated, and nurtured a very strong relationship in a handoff from Vince. They have a lot of trust and faith in each other. We’ve been delivering on those events. Potentially, we could look to do more events, but nothing is planned beyond those two events at this time. We will be continue to look at festivalizing those WWE events more than we already do.“

Source: PWInsider.com, Fightful.com 1 & 2