TKO Group Holdings, Inc. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Business Momentum: 2025 started strong with UFC and WWE driving growth. Q1 revenue and profitability exceeded internal expectations, leading to raised full-year guidance. The acquisition of IMG, On Location, and PBR was completed, with focus on integrating these assets and identifying synergies.
• UFC Highlights: Live events set records (e.g., London fight night, Sydney event), renewed global partnerships (Monster Energy, Meta), and partnered with the WA government for events in Perth through 2026.
• WWE Highlights: Launched a Netflix partnership, content performed well internationally, live events outperformed with records in ticket sales and sold-out events, and WrestleMania 41 set multiple records in ticket sales, hospitality, and viewership.
• IMG, On Location, PBR Highlights: IMG renewed partnerships (Conmebol, Euroleague Basketball, MLS), On Location saw strong fan experiences with the NFL partnership, and PBR events drew 640,000 fans to 40 events.

Segment Performance

• UFC: Generated revenue of $360 million, a 15% increase year-over-year. Adjusted EBITDA was $227 million, up 17% y-o-y, with an adjusted EBITDA margin of 63%. Live events and hospitality revenue rose 66%, partnerships and marketing revenue increased 32%, and media rights production and content revenue grew 4%.
• WWE: Reported revenue of $392 million, a 24% increase y-o-y. Adjusted EBITDA was $194 million, up 38% y-o-y, with a margin of 50%. Live events and hospitality revenue jumped 52%, partnerships and marketing revenue soared 86%, and media rights production and content revenue increased 14%.
• IMG: Generated revenue of $476 million, a 13% decrease y-o-y. Adjusted EBITDA was $74 million, down 10% y-o-y, with a margin of 15%.
• Corporate and Other: Revenue was $54 million, up $2 million y-o-y. Adjusted EBITDA was a negative $77 million, flat with the prior year period.

Guidance

• Raised full-year guidance for TKO Group Holdings, Inc. excluding acquired businesses: Revenue expected to be $3.005-$3.75 billion, and adjusted EBITDA $1.39-$1.43 billion, an increase from previous guidance.
• Including acquired businesses: Targets revenue of $4.49-$4.56 billion and adjusted EBITDA of $1.49-$1.53 billion for 2025.
• Identified over $40 million in run-rate cost savings, with $15 million expected in 2025. Free cash flow conversion rate, excluding nonrecurring amounts, is expected to exceed 60%.

Risks

• Macroeconomic uncertainties affecting consumer behavior and marketing budgets.
• Potential impact of tariffs on consumer products, though minimal for WWE and UFC due to their license model.
• Uncertainties related to media rights negotiations and economic conditions that could impact partnerships and live events.

Question and Answer

• Q: Update on UFC rights renewal and free cash flow A: Mark Shapiro stated discussions with third parties regarding UFC rights are ongoing, with ESPN remaining a key partner. Andrew Schleimer mentioned nonrecurring amounts impact free cash flow, but excluding these, the conversion rate exceeds 60%.
• Q: Boxing economics and distribution A: Mark Shapiro explained the new boxing organization will host 12 cards annually, with super fights and undercard events, and separate media rights and partnerships.
• Q: IMG segment modeling and growth A: Andrew Schleimer discussed transparency with new KPIs for IMG, and Mark Shapiro noted IMG's growth and profitability expectations, impacted by events like the Super Bowl and Olympics pre-spend.
• Q: Site fee deals and volume A: Mark Shapiro and Andrew Schleimer discussed active site fee deals, focusing on economic impact and negotiations, but no specific percentage volume was disclosed.
• Q: AAA wrestling acquisition and opportunities A: Mark Shapiro and Nick Khan discussed the acquisition's potential for monetization, new wrestlers, and efficiencies, with incremental impact on guidance.
• Q: Concerns about equity becoming less exciting A: Mark Shapiro reassured there are ongoing opportunities in global partnerships, live events, new promotions, and media deals to maintain growth excitement.