TKO Group Posts Better-Than-Expected Revenue In Q1, But UFC Legal Settlement Squeezes Endeavor-Run Combat Sports Outfit

Dade Hayes
·2-min read

TKO Group Holdings posted better-than-anticipated revenue but saw a March antitrust settlement with UFC fighters squeeze its bottom line.

The company, formed through the merger of WWE and UFC last September, is run by Endeavor Group Holdings. Endeavor recently unveiled a plan to go private, which will make TKO the only public window onto the activities of Ari Emanuel & Co. once the privatization closes. Endeavor did not conduct an earnings call after the release of its fourth quarter results in February. It is scheduled to report new quarterly numbers on Thursday.

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Revenue of $629.7 million came in ahead of Wall Street analysts’ expectations, though the WWE and UFC components each recorded upticks in the single digits. Because of the timing of the merger, results in the quarterly report reflect the operations only of UFC.

One new piece of news included in the earnings release was WWE’s $25 million sale of rights to Monday Night Raw to NBCUniversal. Under the short-term extension, the franchise will continue to air on USA Network through the end of the year before a long-term, exclusive streaming deal with Netflix kicks in next January.

Net losses for TKO totaled $249.5 million in the quarter, while adjusted earnings before interest, taxes, depreciation and amortization [EBITDA] came in at $282.2 million. The company noted a $335 million settlement of antitrust claims filed by UFC fighters during the quarter. The settlement, announced in March, is payable in installments, per the earnings release. CFO Andrew Schleimer said during a conference call with analysts that the company planned to make two $100 million payments toward the settlement during 2024 and the balance in 2025.

TKO raised its full-year guidance for revenue and adjusted EBITDA. It revised its forecast for free cash flow conversion to more than 40%, noting that free cash flow fell by more than half in the quarter to $27.8 million, in part due to expenses related to WWE’s new Stamford, CT headquarters building.

In the earnings release, Emanuel pointed to the UFC settlements and the raised guidance. “These positive developments, along with the strength in our underlying businesses, give us more conviction than ever in
the combination of UFC and WWE, and in TKO’s ability to deliver sustainable long-term value for shareholders,” he said.

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