Formula One Group Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Split-off of Liberty Live: Expected to complete on December 15, shareholder vote on December 5. Aims to highlight value of Live Nation position.
• Formula One: Renewed Heineken deal, signed Apple partnership for U.S. distribution, strong fan engagement with growing attendances and social media followers. Active media rights negotiations, race promotion renewals (Azerbaijan, Monaco, Austin), and strong sponsorship/licensing growth.
• MotoGP: Closed acquisition July 3, working on strategic plan, race renewals (Japan through 2030, others through 2031), new races in Brazil (2026) and Buenos Aires (2027), and increased social engagement.
• Corporate: Quint's seasonal business with largest events in Q2 and Q4, intergroup revenue from MotoGP eliminated in consolidated results.

Segment Performance

• Formula One: Revenue up 9% and adjusted OIBDA up 15% year-to-date despite one fewer race. Strong commercial momentum with renewals like Heineken, sponsorships with brands like Hello Kitty and Pottery Barn, and a landmark distribution partnership with Apple in the U.S. Net leverage at F1 OpCo was 3.0x at quarter end.
• MotoGP: Closed acquisition July 3, year-to-date revenue grew in race promotion and media rights, but adjusted OIBDA declined due to investments. Net leverage was 5.6x. Focus on enhancing Grand Prix experience, global footprint, and sponsorships.
• Liberty Live Group: Attributed cash of $297 million. The margin loan for Live Nation was amended to extend maturity and reduce spread.
• Corporate and Other: Revenue $266 million including Quint results and Las Vegas Grand Prix Plaza rental income. Corporate and other adjusted OIBDA loss was $7 million.

Guidance

• Formula One: Expect modest operating leverage with the new Concorde agreement, continued investment in growth strategies with expected continued growth in cost base.
• MotoGP: Anticipate continued growth in cost base as they scale commercial functions and enhance sponsorship capabilities.
• Liberty Live: Split-off expected to better highlight the value of Live Nation position and asset-backed equity.

Risks

• Market and Regulatory Risks: Fluctuations in foreign currency affecting MotoGP's euro-denominated revenue and costs, regulatory changes impacting media rights and sponsorships.
• Competitive Risks: Intense competition for media rights and intellectual property, potential loss of key partners or sponsors.

Question and Answer

Q: On the U.S. rights agreement, how does engagement look and what gives confidence in growing the U.S. media audience?

A: Stefano Domenicali states the Apple partnership is a long-term deal with a global brand, leveraging Apple's ecosystem to engage young, dynamic fans. Derek Chang adds that Apple's reach goes beyond traditional broadcast, using multiple platforms to enhance engagement.

Q: About Vegas ticket sales and cost?

A: Stefano Domenicali mentions Vegas is on track with ticket sales, focusing on cost control and long-term investment in the market. Derek Chang highlights the positive vibe around the Vegas Grand Prix and long-term opportunity.

Q: On sponsorship and licensing strategy?

A: Stefano Domenicali discusses long-term sponsorship agreements, cross-contamination of big partners, and licensing growth with deals like LEGO, Disney, and Hello Kitty, emphasizing community engagement.