TKO Q3 Investor's call notes

[Chris]

TKO Q3 financial call notes: WWE revenue increases while UFC revenue dips, boxing future

The following is being updated as the 5 PM Eastern call progresses. TKO — the parent company of WWE and the UFC — announced their 2024 Q3 quarterly earnings on Wednesday, announcing revenue of $681.2…

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TKO — the parent company of WWE and the UFC — announced their 2024 Q3 quarterly earnings on Wednesday, announcing revenue of $681.2 million, net income of $57.7 million, and adjusted EBITDA of $310 million from July through September of this year.


For the full year, they revised their revenue target to $2.745 billion, up from the previously announced $2.67 billion.

WWE revenue finished at $326.3 million, up from $287.3 million year-over-year — the latter of which includes revenue before the merger with UFC was completed and just afterward. Per usual, the 14% increase ($39 million) was driven by media rights and content fees, live events and sponsor revenue.

WWE-specific numbers for the quarter are as follows:

• $227.4 million in media rights and content
• $51.1 million in live events
• $21.7 million in sponsorship
• $26.1 million in consumer products

In prepared remarks, company head Ari Emanuel said they set new records in 42 markets. They held 18 events outside the U.S., up from 11 the previous year, citing their return to Japan and run of successful PLEs which included Germany’s Bash in Berlin.


UFC

Quarterly revenue was down 11% year over year to $354.9 million, driven by a $50.4 million decrease in media rights and content revenue due to having one less “numbered” event and two fewer Fight Nights than the year prior. That was offset by a $10.2 million increase in sponsorship revenue and fees from renewals while ticket revenue was flat.

Specific numbers for the quarter are as follows:

• $216.3 million in media rights and content
• $51.4 million in live events
• $74 million in sponsorship
• $13.2 million in consumer products

In their prepared statements, they brought the recent UFC vs. Cung Le settlement and reiterated it will be tax deductible to the company as previously relayed.



Q&A

• Asked about previous comments about splitting up UFC TV rights, Mark Shapiro re-iterated that they are looking to maximize value, and how they are driving subs for ESPN+ and are still a ratings winner for ESPN/ABC — bucking a trend with other leagues who are struggling early in their deals. He said WWE is a still a stalwart when it comes to TV ratings.
• Asked about why PPV is still a strong model for UFC, Shapiro said they still sell them overseas while ESPN sells them domestically. When it comes to negotiations, Shapiro said it’s whatever the market will bear. He said PPV is still a strong model. “We will not have a shortage of suitors,” he said, re-iterating how much they love Disney.
• Asked about Dana White’s comments about going into boxing, Shapiro said off the cuff comments by White does not translate into anything for Wall Street. He said if they were to get involved, they would be involved in an organic way, not a merger and acquisitions way. Ideally, they would partner with someone who would pay TKO to operate it. “Boxing is ripe for a fix,” he said.
• Shapiro said he is pleased with the growth of UFC Fight Pass and are seeing upticks in subs internationally, and foresee keeping that separate from any media deal. Having more live events of all kinds of fighting is the key.
• Shapiro again said the recent Noche show at the Sphere in Las Vegas was a one-and-done, but that doesn’t mean they couldn’t run one in the eventual one in Abu Dhabi.
• Asked how Netflix could increase WWE sponsorship worldwide, Shapiro said they have been great out of the gate in selling combo packages with media inventory and around the event. They have a new deal with Minute Maid where they are a WWE sponsor and also Netflix inventory. Nick Khan made an appearance on the call, saying they expect the global reach to help them even more.
• Shapiro said they haven’t had challenges with talent leaving because both WWE and UFC is the destination spot, something they don’t take for granted. They want to keep those costs under control and as long as they are aligning with right partners and storytelling, people will gravitate to both UFC and WWE.
• TKO will not explore any other Endeavor assets past what they already brought on/acquired recently like PBR, etc.