TKO Group Holdings, Inc. Q3 FY2024 earnings call

• Over a year since UFC and WWE merged, TKO is executing well with record results and greater integration/synergy opportunities than initially expected.
• Expecting to be at the upper end of full-year guidance for revenue and adjusted EBITDA.
• Authorized a $2 billion share repurchase program and $75 million quarterly cash dividend program.
• Announced acquisition of Professional Bull Riders (PBR), On Location, and IMG, strengthening global sports position.
• UFC 306 at Sphere Las Vegas was a record-grossing event. WWE live events outperformed with international momentum, including return to Japan and Germany's first premium live event.
• WWE had successful debuts on USA Network and CW Network, with NXT up 12% in viewership vs USA last year, and SmackDown driving strong viewership under NBCUniversal deal.

For the third quarter of 2024, TKO's UFC segment generated revenue of $355 million, a decrease of 11% or $43 million. Adjusted EBITDA was $196 million, a decrease of 18% or $43 million. UFC's adjusted EBITDA margin was 55%, down from 60% in the prior-year period. WWE segment generated revenue of $326 million in the quarter, an increase of 14% or $39 million. Adjusted EBITDA was $175 million, an increase of 72% or $73 million. UFC contributed approximately 52.1% to total revenue ($355M / $681M), while WWE contributed approximately 47.9% ($326M / $681M).

• Now expecting upper end of full-year 2024 guidance range for revenue and adjusted EBITDA.
• Q4 UFC results expected to improve with additional events; WWE Q4 impacted by short-term RAW deal, unfavorable ~$50M to revenue and adjusted EBITDA.
• Full-year 2024 cash flow conversion expected to be in excess of 40% of adjusted EBITDA.
• Revised full-year 2024 revenue target: $2.67 to $2.745 billion; adjusted EBITDA target: $1.22 to $1.24 billion, now at upper end.

• Risks associated with forward-looking statements and uncertainties in events timing that could impact financial results.
• Potential integration risks related to acquiring PBR, On Location, and IMG.
• Unforeseen events could materially affect results, and forward-looking statements are subject to change with new information.

Q: Ben Swinburne asked about UFC renewal and WWE margins.

A: Mark Shapiro and Andrew Schleimer responded, discussing WWE's cost savings, growth in ad sales/sponsorship, and UFC's position in negotiations with media partners.

Q: Brandon Ross inquired about UFC pay-per-view and boxing.

A: Mark Shapiro stated Dana White's comments on boxing are not a current strategy, and boxing would be explored organically if pursued.

Q: David Karnovsky asked about UFC renewal and title sponsorship.

A: Mark Shapiro said UFC Fight Pass is kept as a proprietary asset with potential for more live events, and title sponsorships will be pursued if authentic and seamless.

Q: Stephen Laszczyk asked about UFC events and On Location NFL deal.

A: Mark Shapiro and Andrew Schleimer discussed UFC's potential for more spectacles and the benefit of On Location's extended NFL partnership through 2036, though economics were not disclosed.

Q: Robert Fishman asked about Netflix deal and cost synergies.

A: Mark Shapiro and Nick Khan talked about WWE's growth in sponsorships with Netflix, and Andrew Schleimer discussed cost synergies progress with more details to come in February.

Q: Richard Greenfield asked about Endeavor asset sales.

A: Mark Shapiro stated TKO will not bid on other Endeavor assets, and Ari Emanuel could bid on them in personal capacity, with TKO remaining a sports pure play.