TKO Group Holdings, Inc. (TKO) Earnings

Management highlights

- Core Live Event & Brand Highlights - UFC Freedom 250 was a landmark event that generated over $1 billion in earned media value, reached more than 34 million total viewers globally, and delivered the planned strategic and partnership results despite an expected $30 million loss. UFC 329 became the highest grossing UFC event in history, and the Paramount partnership has already delivered 20 million subscriber households watching over 200 million hours of UFC programming year-to-date, with viewership 23x the average prior PPV event, confirming the success of removing the double paywall. - WWE delivered a string of sold-out events globally, including the first ever premium live event in Italy (Clash at Turin), which set an arena revenue record and coincided with the local Netflix launch. WWE Raw ranked in Netflix's global top 10 every week of Q2, and the company has launched premium live events with Netflix in Germany, Austria, and Switzerland. WrestleMania 42 drew over 106,000 fans and recorded one of the highest gates in WWE history. - On Location's FIFA World Cup hospitality program surpassed $2 billion in sales with over 568,000 packages sold through Q2, with strong demand through the knockout stage and high last-minute sales. LA 28 Olympics hospitality has already generated $280 million in orders with over 20,000 bookings, two years before the event. - PBR had a strong quarter, highlighted by a sold-out Space Cowboys event at the U.S. Air Force Academy that drew nearly 31,000 fans, and the PBR Team Series is in active discussions with potential investors for new franchises. - Zufa Boxing, TKO's new boxing venture, is growing ahead of schedule. It has signed top talent including Shakur Stevenson, and will host the Garcia vs. Benn super fight in September 2026 at T-Mobile Arena, airing globally on Paramount+. - Strategic & Operational Highlights - The company signed a landmark three-year, seven-event multi-property agreement with the Arizona Sports and Events Alliance, one of the broadest financial incentive package deals in the company's history. Inbound interest for financial incentive packages is growing rapidly, with TKO leveraging its full portfolio of events to secure deals across new domestic and international markets. - All TKO IP is purpose-built for social media: shareable content amplifies live events rather than replacing them, acting as free marketing for future events. TKO management believes the business has natural defensive characteristics against AI disruption, as demand for differentiated live experiences continues to grow. - Over 70% of long-term revenue at UFC and WWE is contracted, providing strong earnings visibility and predictability. - Capital Allocation: Maintaining a robust capital return program is a top priority. Year-to-date 2026, TKO has returned over $1.3 billion to shareholders via dividends and share repurchases. It completed an $800 million accelerated share repurchase program in Q2, and has just over $1 billion remaining in its authorized repurchase program, with additional buybacks planned in the near term. Management views repurchases as highly value-accretive given the current stock price dislocation relative to intrinsic value.

Guidance

- Full year 2026 guidance was raised: TKO now targets total revenue of $5.775 billion to $5.825 billion and adjusted EBITDA of $2.275 billion to $2.305 billion. This represents a $75 billion increase at the midpoint for revenue, and a $25 million increase at the midpoint for adjusted EBITDA, compared to prior February 2026 guidance. The upward revision reflects stronger than expected performance across all businesses in the first half of 2026, with better than expected FIFA World Cup results contributing to the upgrade but not being the sole driver. - TKO continues to target 380 to 420 million in annual financial incentive package revenue by 2030, and $1.2 billion in annual global partnerships revenue by 2030, both of which remain on track. - Normalized free cash flow conversion is targeted to exceed 60% in 2026, adjusting for World Cup and UFC Paramount rights deal working capital impacts. Management expects meaningful step-ups in free cash flow conversion in 2027 and beyond. - Q3 2026 quarterly expectations: UFC results will benefit from the Paramount media rights step-up and a favorable event mix (12 total events, 3 numbered events vs 2 in the prior year period) with multiple large financial incentive packages. WWE will see a headwind from event timing, with only 1 premium live event (SummerSlam) vs 4 in the prior year period. IMG will continue to benefit from FIFA World Cup hospitality revenue, partially offset by pre-sales spending for LA28. Corporate & Other will get a contribution from the September Garcia-Benn super fight, leading to results broadly comparable to the prior year period which included the Canelo vs. Crawford event.

Segment performance

Consolidated Q2 2026 results: Total revenue of $1.547 billion (+18% YoY), adjusted EBITDA of $650 million (+23% YoY), adjusted EBITDA margin of 42% (+180 bps YoY). Excluding the $30 million planned loss from UFC Freedom 250, consolidated margin expansion would have been higher. 1. UFC: Revenue of $536 million (+29% YoY, 34.7% of total consolidated revenue). Content & media revenue increased 25% to $325 million, driven by the step-up in rights fees from the new Paramount deal. Partnerships and marketing revenue increased 69% to $145 million, boosted by new and expanded partnerships tied to UFC Freedom 250. Live events and hospitality revenue decreased 18% to $48 million due to the lack of ticket sales for UFC Freedom 250 and a lower number of numbered PPV events. Financial incentive package revenue nearly doubled YoY. 2. WWE: Revenue of $621 million (+12% YoY, 40.1% of total consolidated revenue). Adjusted EBITDA was $368 million (+12% YoY), with an adjusted EBITDA margin of 59% (flat YoY). Consumer products and licensing revenue increased 38% to $46 million, driven by higher trading card and collectible royalties from the multi-property Fanatics deal. Partnerships and marketing revenue increased 8% to $63 million, led by WrestleMania 42's record 32 sponsors. Live events and hospitality revenue decreased 18% to $152 million, primarily due to lower WrestleMania 42 ticket revenue compared to the prior year's WrestleMania 41. 3. IMG: Revenue of $355 million (+16% YoY, 23% of total consolidated revenue). Adjusted EBITDA was $79 million (+171% YoY), with an adjusted EBITDA margin of 22% (up from 9% YoY). The strong growth was driven by the FIFA World Cup hospitality program, with $45 million of adjusted EBITDA recorded in Q2 2026, and full year adjusted EBITDA from the event now expected to exceed the prior estimate of $75 million. 4. Corporate & Other: Revenue of $49 million (+9% YoY, 3.2% of total consolidated revenue). Adjusted EBITDA was -$77 million, flat YoY. Revenue growth was driven by higher management fees for Zufa Boxing and higher PBR event revenue from the sold-out Space Cowboys event at the U.S. Air Force Academy, which included a large financial incentive package.

Risks & headwinds

- Management notes that forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from projections if risks materialize or assumptions prove incorrect. Specific risks are disclosed in TKO's SEC filings. - TKO is continuing to closely monitor geopolitical developments in and around the Middle East, for any potential impact on its scheduled events in the region. As of the call, all planned events have been held as scheduled, and all remaining planned events in the region are moving forward as planned. - International expansion of WWE requires incremental upfront travel and production costs, which near-term margins as the business builds long-term market position.

Analyst Q&A

• Q: The merged PFL-Jake Paul-MVP combination on Netflix has recently gained investor attention. How much of a competitive threat is this to TKO, and are there any ongoing merger discussions with Formula One? Will TKO pursue large M&A in 2027? /

  A: Management notes that the individual prior promotions were not independently sustainable, and it remains to be seen what the merged combination can achieve. Competition has historically made TKO stronger. With respect to M&A, TKO remains 100% focused on execution of its existing business, and is not hunting for any M&A. There are no ongoing conversations with Formula One or any other large potential target, and speculation about such deals is unfounded.

• Q: How is TKO balancing international vs. core domestic market engagement growth, and what is driving the full year guidance upgrade? /

  A: TKO's core growth catalysts are clear and predictable: event optimization, global partnerships, financial incentives, locked-in long-term media deals, and growth of Zufa Boxing. The company prioritizes improving fan experience and profitability simultaneously, and growing globally with the support of partner Netflix benefits both international and domestic revenue. The guidance upgrade reflects broad-based strength across the entire business, not just the better-than-expected FIFA World Cup results, with UFC performing particularly well in the first half.

• Q: What is TKO's view on the current sports rights market, and what is the long-term opportunity for WWE international expansion with Netflix? /

  A: TKO has no plans to accelerate upcoming media rights negotiations for its assets, as it already has locked-in long-term deals with built-in escalators and stable recurring revenue. The sports rights market is currently very strong, as live sports retain unmatched engagement that is rare in the current media environment. For WWE international, incremental event expansion is a deliberate long-term investment. As Netflix rolls out dynamic ad insertion for WWE content globally, TKO and Netflix will jointly sell integrated domestic and in-venue partnership inventory, which is expected to drive meaningful partnership growth starting in late 2026 through 2027.

• Q: What long-term benefit came from UFC Freedom 250, and what is the outlook for Zufa Boxing? /

  A: UFC Freedom 250 was used to sign multi-year partnership deals that will benefit revenue in 2026, 2027, and beyond, meeting all of the management's strategic expectations for the event, with the $30 million loss coming in exactly as planned. Zufa Boxing is structured as a low-risk joint venture, with TKO taking no material funding obligations, only opportunity cost of management time. Current growth is comfortably ahead of schedule, with the core priorities for the rest of 2026 being signing top talent, staging high-quality events, and expanding brand awareness in key markets including New York and London.