Endeavor’s TKO Group, New Home Of UFC & WWE, Reports First Quarterly Results Since Going Public This Fall

Jill Goldsmith
·5 min read
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TKO Group, the new Endeavor-owned public company created by the merger of UFC and WWE, posted its first quarterly financial results today, driven by Ultimate Fighting Championship, which saw its numbers buoyed by media rights, content fees, live events and sponsorship for the three months ended in September.

WWE had softer numbers in part due to the timing of events and of payment from partners in the 2023 quarter vs last year. Revenue slipped 6% to $287 million. Ebitda (a kind of operating profit) fell about 17% to $102 million. After some drama on the WWE side, Endeavor acquired it from Vince McMahon this fall and rolled it up with UFC into TKO, creating a combat sports juggernaut. Ari Emanuel is CEO of both Endeavor and TKO.

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The numbers hit as Endeavor this month signaled another dramatic move — possible plans to go private thanks to its biggest shareholder Silver Lake Partners.

WWE sales were also squeezed by lower consumer products licensing revenue, lower media rights and content revenue, all of which more than offset the contractual escalation of media rights fees for WWE’s Raw and SmackDown, and premium live events, said TKO. WWE is in the midst of renewing its key franchises. In September it announced an new five-year deal for Smackdown, which will move from Fox to USA Network next year.

At UFC, sales jumped 17% to $397 million, driven by a $31 million increase in media rights and content fees, a $12.7 million increase in live events revenue and a $12.2 million increase in sponsorship revenue. The rights and fees were domestic and international and included two additional Fight Night events. There was one more live event, as well as new sponsors and higher renewals. UFC ebitda rose 17% to $238 million on the stronger sales, partly offset by higher operating costs of $18 million.

Combined revenue for UFC and WWE for the quarter rose to $685 million from $645 million, up about 6%. Combined ebitda of $340 million grew about 4% from $326 million.

Execs will host a call with Wall Streeters at 5 ET to discuss the numbers.

Since launching TKO, “our teams at WWE, UFC, and Endeavor have been focused on integration and executing our strategy,” Emanuel said. “This includes identifying cost synergies at the high end of the range we guided, bringing events to new international markets including Saudi Arabia and Australia, delivering media rights increases for WWE, and closing the largest global partnership deal ever for UFC with AB InBev. We remain bullish about TKO’s ability to accelerate growth and unlock long-term value for shareholders.”

The multiyear InBev deal was announced in October, making Anheuser-Busch and Bud Light UFC’s exclusive official beer partner starting in January.

Endeavor spun out its most lucrative assets into TKO in the hope that would boost EDR’s stock price. But the bump didn’t materialize and Emanuel said this month that Endeavor is exploring strategic alternatives, although its stake in TKO won’t change. Endeavor’s major investor Silver Lake revealed that it’s working on a proposal to take the company private.

TKO actually reported consolidated quarterly net income of $22 million, a sharp drop from $129 million on revenue that jumped to $449 million from $340 million. But these numbers only include WWE financials from Sept. 12 (the day the TKO deal closed) through Sept. 30 (the end of the third quarter).

It said the profit drop reflects a $136-million hit from selling, general and administrative expenses including “professional fees and bonuses related to the TKO transaction and restructuring charges.”

Pro forma results comparing a full quarter year-on-year for WWE as well will likely be filed with the SEC.

On September 13, TKO declared a special one-time cash dividend of $3.86 per share of Class A common stock, which was paid on September 29.

The company said cash flows generated by operating activities were $67 million, a decrease of $71.3 million from $138.3 million, primarily due to lower net income.

Free cash flow was $63.6 million, a decrease of $72.5 million from $136.1 million, primarily due to the decrease in cash flows generated by operating activities.

Cash and cash equivalents were $188.6 million, and gross debt $2.773 billion as of September 30.

TKO said operational highlights for the quarter include:

-UFC held 13 events that consistently delivered strong viewership and attendance and set several all-time records for gross revenue at the respective arenas

-WWE entered into a five-year domestic media rights agreement with NBCUniversal for SmackDown beginning in October 2024

–WrestleMania 40, to be held at Lincoln Financial Field in Philadelphia in April 2024, sold more than 90,000 tickets in one day when it went on sale, breaking the record for all-time gate set at WrestleMania 39

-UFC completed a multi-year sponsorship agreement, UFC’s biggest ever in the aggregate including cash and marketing assets, with AB InBev to become the exclusive “Official Global Beer Partner of UFC” effective January 1, 2024

-UFC agreed to an expansion of its presence in the Middle East North Africa (MENA) region with the extension of its partnership with the Department of Culture and Tourism – Abu Dhabi to continue to host numbered events through 2028 and an agreement to bring up to 3 Fight Nights to the region annually, including its first event in Saudi Arabia in March 2024

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