TKO Q4 2023 earnings call notes

[Chris]

TKO Group Holdings released its final 2023 earnings report and held its quarterly investors call on Tuesday afternoon.

The company listed the following key highlights for 2023:

• 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

UFC revenue for 2023 increased 13 percent to $1.3 billion. The growth was driven by a $76.2 million increase in media rights and content fees and a $42.6 million increase in live events revenue. Additionally, there was $29.5 million in growth from sponsorship revenue.

UFC's EBITDA increased just 11 percent despite a 13 percent growth in revenue due to an increase in operating costs.

The report also lists $34.2 million in legal costs, $20 million of which is related to the settlement of an antitrust lawsuit, likely referring to the one WWE settled with MLW in December.

For the twelve-month period ended December 31, 2023, the Company’s consolidated pre-tax results included $34.2 million in costs related to certain litigation matters at UFC and WWE, including the impact of a $20.0 million charge related to the settlement of an antitrust lawsuit at WWE.

WWE revenue for 2023 was $1.326 billion, up from $1.292 billion in 2022. The growth was due to an increase in live event revenue, media rights, and sponsorship revenue. This number was partially offset by a decrease in consumer product licensing, however.

WWE's EBITDA increased 4 percent from 2022 to $533.1 million due to the increase in revenue but offset by an increase in expenses, particularly the "transition of our digital retail platform and venue merchandise business to Fanatics."

The overall corporate adjusted EBITDA was listed at a loss of $196.3 million compared to a loss of $179.9 million the year prior.

From today's report:

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.

Notes from the TKO Group Holdings Earnings call on February 27, 2024 --

• TKO Group CFO Andrew Schleimer noted that site fees are a key growth area for the company, citing Saturday's Elimination Chamber in Perth, Australia
• Schleimer stated they are still working on securing a home for WWE Raw after the USA Network deal ends on September 30 and before the deal with Netflix begins in January 2025.
• Mark Shapiro made a point of mentioning that no one should assume any dollar amounts regarding rights fees for Raw in late 2024, but he is confident the show will air during the window of time between the USA and Netflix deals.
• A question is asked regarding if the company would be willing to purchase a large amount of stock from a shareholder. Shapiro quickly noted that he's assuming the question pertains to Vince McMahon and that they simply don't know what he plans to do.
• Regarding the UFC antitrust lawsuit set for April, they believe they have the facts on their side but would not comment further.
• When asked about the PFL and Bellator merger, Emanuel said they enjoy competition, and noted that forms of entertainment other than MMA are also their competition.
• There was a question on whether Netflix having international rights to WWE content would prevent WWE from developing brands such as NXT Europe. Nick Khan said the deal does not prevent them from creating brands in international markets, although Netflix would get first-look rights for any content produced.

“TKO is off to a strong start following record financial performance in 2023 at both UFC and WWE,” said Ariel Emanuel, CEO of TKO in a statement. “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.”

https://www.f4wonline.com/news/wwe/tko-q4-earnings-call-recap-revenue-growth-mlw-settlement-vince-mcmahons-stock

 

[Deezy]

The UFC actually reporting quarterly financials is just bonkers to me.

 

[Dale]

I know they've been pulling constantly good numbers but live attendance being up 30% is still impressive