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TKO Group Holdings Q1 2024 Financial Results

Overview

TKO Group Holdings, the parent company of Ultimate Fighting Championship (UFC) and World Wrestling Entertainment (WWE), reported its first quarter 2024 financial results.

Key Highlights

• Revenue increased 105% to $629.7 million driven by the acquisition of WWE
• Net loss was $249.5 million compared to net income of $87.9 million in Q1 2023
• Adjusted EBITDA increased 63% to $282.2 million
• Completed $335 million settlement of UFC antitrust lawsuits
• Added 47 WWE events in the quarter

UFC Performance

• UFC revenue increased 2% to $313 million
• Higher sponsorship and consumer products licensing revenue offset by lower media rights revenue
• Held 3 numbered UFC events and 8 Fight Nights
• Adjusted EBITDA margin was 62%, up from 61%

UFC delivered steady performance with higher sponsorship and licensing revenue. Media rights declined due to one fewer major pay-per-view event. Fighter pay was also lower with fewer events. UFC continues to see strong fan interest.

WWE Acquisition Driving Growth

The transformative acquisition of WWE added $316.7 million in incremental revenue in the quarter. WWE held 2 premium live events, 25 televised events, and 20 non-televised events. All key WWE business lines contributed to revenue including media rights, live events, consumer products, and sponsorship.

The addition of WWE provides leading sports entertainment content and intellectual property to complement UFC’s premier mixed martial arts content. It also expands TKO’s reach, distribution, and consumer products potential.

Expenses and Profitability

• Total operating expenses increased 423% to $840 million
• Net loss of $249.5 million compared to net income of $87.9 million in the prior year quarter
• Adjusted EBITDA increased 63% to $282.2 million

The increase in operating expenses and net loss was primarily due to a $335 million legal settlement of UFC antitrust lawsuits. This was a one-time settlement cost.

Excluding this settlement and other one-time costs related to the acquisition, the core business delivered strong Adjusted EBITDA growth of 63%.

Cash Flow and Balance Sheet

• Cash flow from operations was $59.3 million
• Cash on hand was $377 million as of March 31, 2024
• Debt outstanding was $2.7 billion

TKO has a strong liquidity position to fund operations and future growth. The company is prioritizing debt paydown following the WWE acquisition to maintain financial flexibility.

Outlook

TKO management believes the company has significant opportunities to drive growth from the scale of its fan-centric sports entertainment brands and content. Priorities include continuing to expand distribution, launch new content and events, and deepen consumer products potential.

While macroeconomic conditions may create some near-term uncertainty, the company believes in the enduring strength of its brands and content. TKO is well positioned to deliver long-term growth and value creation.

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