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01/10 16:16
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong financial metrics with raised revenue and EBITDA guidance, increased free cash flow, and positive strategic partnerships like the ESPN media rights deal. Despite a decrease in IMG revenue due to the absence of the Olympics, other segments show growth. The Q&A section reveals positive sentiment towards strategic partnerships and future growth opportunities in UFC and WWE. While there are concerns about specific financial details, the overall outlook and strategic plans suggest a positive stock price movement in the short term.
Revenue $1.12 billion, a decrease of 27% year-over-year. The decrease was attributed to the 2024 Paris Olympics, which was a key driver of the decrease in revenue.
Adjusted EBITDA $360 million, an increase of 59% year-over-year. The increase was due to the absence of loss-making events like the 2024 Paris Olympics.
Adjusted EBITDA Margin 32%, up from 15% in the prior year period. The increase was driven by the absence of loss-making events and operational efficiencies.
UFC Revenue $325 million, a decrease of 8% year-over-year. The decrease was due to holding one less numbered event compared to the prior year.
UFC Adjusted EBITDA $166 million, a decrease of 15% year-over-year. The decrease was attributed to one less numbered event and higher production costs for UFC 306.
UFC Adjusted EBITDA Margin 51%, down from 55% in the prior year period. The decrease was due to the mix of events and higher production costs.
WWE Revenue $402 million, an increase of 23% year-over-year. The increase was driven by the expansion of SummerSlam to a 2-night event and the introduction of Wrestlepalooza.
WWE Adjusted EBITDA $208 million, an increase of 19% year-over-year. The increase was driven by higher ticket sales, site fees, and new partnerships.
WWE Adjusted EBITDA Margin 52%, down from 54% in the prior year period. The decrease was due to strategic investments in talent and new properties.
IMG Revenue $337 million, a decrease of 59% year-over-year. The decrease was due to the absence of revenue from the 2024 Paris Olympics.
IMG Adjusted EBITDA $61 million, an increase of $116 million year-over-year. The increase was due to the absence of loss-making events like the 2024 Paris Olympics.
IMG Adjusted EBITDA Margin 18%, up from negative 7% in the prior year period. The increase was driven by cost reduction initiatives and the absence of loss-making events.
Corporate and Other Revenue $63 million, an increase of 17% year-over-year. The increase was driven by promotional and management fees from boxing initiatives.
Corporate and Other Adjusted EBITDA Negative $75 million, an improvement from negative $90 million in the prior year period. The improvement was due to cost reductions and increased revenue from boxing initiatives.
Free Cash Flow $399 million, with a free cash flow conversion of 111%. The increase was positively impacted by the timing of cash receipts and payments related to the Canelo versus Crawford boxing event.
UFC Media Rights Agreement: Secured a 7-year $7.7 billion agreement with Paramount, doubling the AAV of the previous deal and expanding reach globally.
WWE Partnership with ESPN: Launched a 5-year premium live events partnership, introducing Wrestlepalooza and expanding WWE's footprint.
Zuffa Boxing Launch: Announced a significant media rights agreement with Paramount and promoted the Canelo vs. Crawford fight, drawing 41 million viewers.
Global Reach Expansion: UFC and WWE events set records in various markets, including China and the U.S., and expanded partnerships with venues worldwide.
New Partnerships: WWE added blue-chip brands like Maybelline and JPMorgan Chase, while UFC secured deals with Wingstop and Sony Pictures.
Revenue and EBITDA Growth: Generated $1.12 billion in revenue and $360 million in adjusted EBITDA, with a 32% margin.
Cost Synergies: Realized greater-than-expected cost synergies from integrating IMG, On Location, and PBR.
Stock Buyback and Dividend Increase: Launched a $1 billion stock buyback and doubled the quarterly cash dividend.
Future Growth Focus: Prioritized UFC's Paramount debut, WWE's ESPN presence, and Zuffa Boxing's launch for 2026.
Market Conditions: The company faces risks from economic uncertainties and market conditions that could impact revenue streams, particularly in the context of fluctuating demand for live events and premium sports content.
Regulatory Hurdles: Potential regulatory challenges could arise, especially with international expansions and partnerships, such as those in Saudi Arabia and China.
Supply Chain Disruptions: Operational risks include potential disruptions in event logistics, production, and talent availability, which could impact live events and media production schedules.
Strategic Execution Risks: The integration of IMG, On Location, and PBR into TKO presents challenges in realizing cost synergies and revenue opportunities. Additionally, the launch of Zuffa Boxing and its operationalization by 2026 could face execution risks.
Economic Uncertainties: Economic downturns or changes in consumer spending habits could adversely affect ticket sales, site fees, and partnership revenues.
Competitive Pressures: The company operates in a highly competitive environment, with pressures from other sports and entertainment providers potentially impacting market share and profitability.
Revenue and Adjusted EBITDA Guidance for 2025: The company raised its full-year 2025 guidance for revenue to $4.69 billion to $4.72 billion and adjusted EBITDA to $1.57 billion to $1.58 billion, reflecting strong operating performance at UFC and WWE.
2026 Financial Projections: The 2026 financials will include a significant step-up due to the commencement of the 7-year UFC rights deal with Paramount and a full year of media rights fees from the 5-year agreement with ESPN for WWE PLEs. These deals are expected to provide high-margin contractual revenue streams with annual escalators.
Site Fees Growth: The company anticipates meaningful momentum in securing higher site fees from existing and new markets globally. The 2026 WWE calendar includes 3 PLEs in Saudi Arabia compared to 1 in 2025.
Global Partnerships Revenue Target: The company aims to achieve $450 million in high-margin partnership revenue in 2025 and is working towards a target of $1 billion in total partnership revenue by around 2030.
Zuffa Boxing Launch: Zuffa Boxing is set to launch in January 2026, with expectations of 2 to 4 super fights per year. The company will receive management fees and commissions for media rights deals related to these events.
Free Cash Flow Conversion: The company is targeting a full-year 2025 free cash flow conversion rate in excess of 60%, excluding nonrecurring amounts and restricted cash impacts.
UFC and WWE Event Calendar for Q4 2025: UFC plans to hold 11 events in Q4 2025, including 4 numbered events, with 9 events featuring live audiences. WWE's Q4 results will benefit from new domestic rights agreements but will have fewer PLE nights compared to the prior year.
Quarterly Cash Dividend: TKO announced a 100% increase in its quarterly cash dividend program. On September 30, the company made its first payment under the upsized program, amounting to approximately $150 million. The company intends to fund quarterly cash dividends with cash flow from operations or cash on hand.
Stock Buyback Program: TKO launched a $1 billion stock buyback program. In September, the company entered into an Accelerated Share Repurchase (ASR) agreement to repurchase $800 million of its Class A common stock. An initial delivery of approximately 3.2 million shares was received, and the agreement is expected to be completed by early December. Additionally, TKO repurchased approximately $26 million of shares through a privately negotiated transaction and entered into a 10b5-1 trading plan for the repurchase of up to $174 million of Class A common stock.
The earnings call highlights strong financial metrics with raised revenue and EBITDA guidance, increased free cash flow, and positive strategic partnerships like the ESPN media rights deal. Despite a decrease in IMG revenue due to the absence of the Olympics, other segments show growth. The Q&A section reveals positive sentiment towards strategic partnerships and future growth opportunities in UFC and WWE. While there are concerns about specific financial details, the overall outlook and strategic plans suggest a positive stock price movement in the short term.
The earnings report shows strong financial performance with significant revenue and EBITDA growth. The new partnerships, especially with ESPN, and strategic decisions on content monetization are promising. The Q&A reveals confidence in ongoing negotiations and future growth opportunities, such as the boxing initiative. Despite some uncertainties in deal outcomes, the overall sentiment is positive.
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