Full report from TKO.
Ahead of their conference call, TKO Group Holdings released their full year 2023 results. Below is the report:
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. The reported results presented in this earnings release cover the period from January 1, 2023 through December 31, 2023 for UFC and the period from September 12, 2023 through December 31, 2023 for WWE.
Full Year 2023 Highlights and Recent Developments
- The UFC segment delivered record financial results. Revenue increased 13% to $1.3 billion and Adjusted EBITDA1 increased 11% to $756 million
- UFC live events revenue increased 34% to a record $168 million, driven by growth in ticket revenues and site fees. UFC held 43 events that generated significant viewership gains and set several all-time records for gross revenue at respective arenas
- UFC sponsorship revenue increased 18% to a record $196 million, driven by new brand partners and renewal increases
- UFC celebrated its 30th anniversary with a series of events commemorating its history and current standing as the world’s premier mixed martial arts organization
- Each WWE premium live event set a viewership record; total WWE domestic viewership and hours viewed on Peacock increased 25% and 22%, respectively, as compared to the prior year
- WWE live event average attendance increased 34%
- In January 2024, WWE entered into a long-term media rights agreement with Netflix beginning in January 2025 for Raw in the United States and all WWE shows and specials outside the United States
Full Year 2024 Guidance
- The Company is targeting revenue of $2.575 billion to $2.650 billion
- The Company is targeting Adjusted EBITDA of $1.150 billion to $1.170 billion
- The Company is targeting Free Cash Flow Conversion2 in excess of 50%
NEW YORK–(BUSINESS WIRE)– TKO Group Holdings, Inc. (“TKO” or the “Company”) (NYSE: TKO) today announced financial results for its year ended December 31, 2023. The reported results presented in this earnings release cover the period from January 1, 2023 through December 31, 2023 for Ultimate Fighting Championship (“UFC”) and the period from September 12, 2023 through December 31, 2023 for World Wrestling Entertainment, Inc. (“WWE”).
“TKO is off to a strong start following record financial performance in 2023 at both UFC and WWE,” said Ariel Emanuel, CEO of TKO. “We secured Anheuser-Busch as the official beer partner of UFC, delivered a transformative deal to bring WWE’s Raw to Netflix beginning in 2025, and expanded our international footprint in important growth markets. We have more conviction than ever in the combination of these businesses and TKO’s ability to drive topline growth and margin expansion, generate meaningful free cash flow, and deliver sustainable long-term value for shareholders.”
Full Year Consolidated Results
- Revenue increased 47%, or $534.9 million, to $1.7 billion. The increase reflected an increase of $152.1 million at UFC, to $1.3 billion, and the contribution of $382.8 million of revenue at WWE associated with the period from September 12, 2023 through December 31, 2023.
- Net Income was $175.7 million, a decrease of $213.3 million from $389.0 million in the prior year period. The decrease primarily 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 $339.0 million, an increase in direct operating costs of $189.0 million, an increase in depreciation and amortization of $104.6 million, and an increase in interest expense of $99.4 million. To a lesser extent, higher income taxes also contributed to the decrease in net income.
- Adjusted EBITDA 1 increased 29%, or $180.4 million, to $809.1 million, due to an increase of $75.1 million at UFC and the contribution of $163.0 million of Adjusted EBITDA at WWE associated with the period from September 12, 2023 through December 31, 2023, partially offset by an increase of $57.7 million in corporate expenses.
- Cash flows generated by operating activities were $468.4 million, a decrease of $33.3 million from $501.7 million, primarily due to lower net income.
- Free Cash Flow2 was $419.8 million, a decrease of $69.5 million from $489.3 million, primarily 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 $235.8 million as of December 31, 2023. Gross debt was $2.761 billion as of December 31, 2023.
UFC
Full Year 2023
Revenue increased 13%, or $152.1 million, to $1.3 billion, primarily driven by a $76.2 million increase in media rights and content fees, a $42.6 million increase in live events revenue and a $29.5 million increase in sponsorship revenue. The increase in media rights and content fees was primarily related to higher domestic and international rights fees resulting from increases in contractual revenues, higher fees associated with international renewals and one additional pay-per-view event in 2023 as compared to the prior year period. The increase in live events revenue was primarily related to 5 additional events with a live audience (26 in 2023 as compared to 21 in the prior year) and higher site fees. The increase in sponsorship revenue was primarily related to new sponsors and increases in fees from renewals.
Adjusted EBITDA increased 11%, or $75.1 million, to $755.7 million, as the increase in revenue (as described above) was partially offset by an increase in expenses. The increase in expenses primarily reflected an increase of $57.8 million in direct operating costs. The increase in direct operating costs was primarily due to an increase of $45.7 million in athlete costs from different matchups as well as higher production costs associated with having one additional pay-per-view event and five additional international events as compared to the prior year. Marketing and venue costs also increased due to five additional events with live audiences in 2023. Selling, general and administrative expenses increased by $16.9 million, primarily driven by higher personnel costs from greater headcount and increased travel and other expenses associated with the additional pay-per-view event and international events.
Adjusted EBITDA margin decreased to 58% from 60%.
WWE
Full Year 2023
Revenue was $382.8 million for the period from September 12, 2023 through December 31, 2023.
Including WWE activity for the periods from January 1, 2023 through September 11, 2023 and for the full year 2022, WWE combined revenue3 was $1.326 billion, as compared to $1.292 billion for the period from January 1, 2022 through December 31, 2022. The increase of 3%, or $34 million, was primarily due to an increase in live events revenue, an increase in media rights and content revenue and an increase in sponsorship revenue partially offset by a decrease in consumer products licensing revenue. The increase in live events revenue was primarily related to an increase in domestic and international ticket sales. The increase in media rights and content fees was primarily related to the contractual escalation of media rights fees for WWE’s flagship weekly programming, Raw and SmackDown, and premium live events, which more than offset a decline in third-party original programming due to the timing of delivery. The decline in consumer products licensing revenue was due to the previously disclosed transition of our digital retail platform and venue merchandise business to Fanatics as well as a decrease in collectibles revenue.
Adjusted EBITDA was $163.0 million for the period from September 12, 2023 through December 31, 2023.
Including WWE activity for the periods from January 1, 2023 through September 11, 2023 and for the full year 2022, WWE combined Adjusted EBITDA3 was $533.1 million, as compared to $512.5 million for the period from January 1, 2022 through December 31, 2022. The increase of 4%, or $20.6 million, was primarily due to the increase in revenue (as described above) partially offset by an increase in expenses. The increase in expenses primarily reflected an increase in content creation costs partially offset by lower expenses related to the timing of third-party original programming and the transition of our digital retail platform and venue merchandise business to Fanatics.
Adjusted EBITDA margin was 43% for the period from September 12, 2023 through December 31, 2023. Including WWE activity for the periods from January 1, 2023 through September 11, 2023 and for full year 2022, WWE combined Adjusted EBITDA margin3 was flat at 40% in both 2023 and 2022.
Corporate
Full Year 2023
Corporate Adjusted EBITDA was a loss of $109.6 million, as compared to a loss of $51.9 million in the prior year period.
Including WWE activity for the periods from January 1, 2023 through September 11, 2023 and for full year 2022, Corporate combined Adjusted EBITDA3 was a loss of $196.3 million, as compared to a loss of $179.8 million for the period from January 1, 2022 through December 31, 2022. The decrease of $16.5 million was primarily due to an increase in personnel costs, including TKO executive compensation, and other general and administrative expenses, including public company expenses, following the formation of TKO in September 2023. The decrease also reflected an increase in service fees paid to Endeavor under the Company’s Services Agreement. These increases more than offset savings associated with restructuring activities following the formation of TKO.
Full Year 2024 Guidance
For the full year 2024, the Company is targeting revenue of $2.575 billion – $2.650 billion and Adjusted EBITDA of $1.150 billion – $1.170 billion. The Company is also targeting full year 2024 Free Cash Flow Conversion in excess of 50%.
Management will provide more detail including key assumptions related to 2024 guidance on today’s earnings call.
A recap of the report and conference call is going to be covered on the 2/28 edition of Pollock x Thurston.
