TKO Q2 Investors Call Notes

[Chris]

TKO Q2 financial notes: WWE revenue, ticket prices, UFC piracy & PPV cost issues

The parent company of WWE & UFC had such a successful second quarter that they increased their targeted revenue for the year. On Thursday, TKO released their Q2 financial statements followed by an…

www.f4wonline.com

The parent company of WWE & UFC had such a successful second quarter that they increased their targeted revenue for the year.

On Thursday, TKO released their Q2 financial statements followed by an investors call that featured comments from the usual company leadership with some nods to what might be coming pricing-wise down the line for consumers.

Overall company revenue increased by a whopping 179% to $851.2 million thanks to WWE ($456.8 million) and UFC ($394.4 million), up from $546 million in Q2 of 2023.

The year-over-year quarterly revenue increase of $46.5 million by WWE was driven by increases in live events revenue, media rights and content revenue. Ticket sales revenue helped the live events portion while the addition of one PLE in the quarter from the prior year helped in all areas. They noted third-party original programming revenue was down due to “timing of delivery” and their consumer products revenue was flat due to an increase in video game license revenue being offset by their transition of live event merch sales to Fanatics.

The UFC revenue increase was drive by increases in media rights & content ($38.9 million), live events ($36.7 million) and sponsorship ($15.5 million). They noted they held one more “numbered event” in the quarter vs. the prior year’s quarter and that their media rights fees contractually escalated in addition to “higher site fee revenues.”

The UFC class action lawsuit was mentioned in their release and on the call, not straying too far from their original statements when the presiding judge would not accept the initial settlement. They believe the judge erred in making his ruling and while they are prepared to go to court on both cases, they are evaluating all their options including new settlement talks.

Call notes:

• Asked about further optimizing ticket prices for WWE, TKO president Mark Shapiro said they haven’t seen any pushback and that site fees are a huge growth sector for them, sponsorship is great and rights fees are great for both WWE and UFC.
• He made a point to say “Don’t underestimate the Netflix play” in growing worldwide in that it’s all about discovery and new viewers due to WWE being featured on the home screen when viewers log on. He said that is “a whole new audience for us” and expects it to help both drive site fees and sponsorship.
• While initially forecasting $100 million in cost savings, TKO chief financial officer Andrew Schleimer said they now expect to exceed that, citing efficiencies gained thus far by cutting “superfluous” production costs and making some shows “smaller.” That comment is believed to be related to using smaller sets for some PLEs which allows for more tickets to be sold and less setup/breakdown costs.
• In an interesting comment, Shapiro said their UFC piracy numbers are “jacked up” due to ESPN being too aggressive with their PPVs pricing. He said he and Dana White talked to ESPN’s Jimmy Pitaro about that and that ESPN was receptive and some changes with discounting for early buys has appeared. He also said they are sustaining their buys.
• Shapiro said TKO head Ari Emanuel has a big focus on “festivalizing” their events and making them more multi-day cultural events, something municipalities and cities are saying they want more of. He mentioned wanting to pit cities against each other to bring them in, citing the Las Vegas vs. Minnesota fight for WrestleMania 41 that saw the former up their offer to secure it.
• Schleimer said the UFC received a $20 million site fee for the company’s debut in Saudi Arabia in June and that there was a “meaningful fee” attached to UFC 302 from Newark, New Jersey.
• Asked about consumer trends for both brands, they aren’t seeing any slowdown, crediting the creativity and matchmaking by Dana White and Paul Levesque. Shapiro said demos are strong, age group is strong, and the Hispanic market has picked up which they are trying to grow.
• He said they are watching their ticket pricing but probably aren’t being as aggressive with WWE as they should be and mentions using some dynamic pricing with some venues.

Other notes

Vince McMahon was in TKO’s 10-Q filing as well with two separate stock purchases agreements by TKO, one on April 4th that purchased 1,642,970 shares from McMahon for $146.2 million and another on April 7th for 1,853,724 shares at $165 million.

 

[Cwalker]

I guess you can say the merger has been…

Best For Business

 

[Dale]

Good bunch of stuff in there but them being on the home screen of Netflix should be a big deal for bringing in new fans. Then again with the amount of money they paid for the rights, thats probably the least they could do