TKO Reports Full Year 2023 Results
- Record financial results reported for 2023 after the merger of UFC and WWE.
- UFC revenue increased by 13% to $1.3 billion, with Adjusted EBITDA up by 11% to $756 million.
- WWE witnessed a 34% increase in live event average attendance.
- The company aims for revenue of $2.575 billion to $2.650 billion for 2024.
- Net income decreased by $213.3 million to $175.7 million due to higher operating expenses.
- Corporate Adjusted EBITDA was a loss of $109.6 million, compared to a loss of $51.9 million in the prior year period.
- Cash flows generated by operating activities decreased to $468.4 million.
- Free Cash Flow was $419.8 million, a decrease of $69.5 million.
Insights
The merger between Endeavor's UFC and WWE to form TKO Group Holdings represents a significant shift in the entertainment and media industry, particularly within the sports entertainment segment. The integration of these two leading entities is poised to create a diversified portfolio of live events, media rights and content distribution that could reshape the competitive landscape.
From a market research perspective, the combined entity's increased bargaining power with sponsors and content distributors is noteworthy. The reported 13% increase in UFC's revenue and 18% increase in sponsorship revenue are indicative of the strong brand equity and audience engagement that the UFC commands. The WWE's transition to Netflix for media rights distribution is a strategic move that capitalizes on changing consumer viewership habits towards streaming platforms. This could potentially lead to increased viewership and revenue streams, given Netflix's substantial subscriber base.
However, the reported decrease in net income, despite revenue growth, raises concerns about the efficiency of the merger's initial integration phase. The increase in operating expenses, including selling, general and administrative expenses, as well as direct operating costs, suggests that TKO Group Holdings is currently absorbing the costs associated with merger synergies and restructuring. The long-term success of this merger will hinge on the company's ability to manage these expenses and realize the projected synergies.
Analyzing the financial health of TKO Group Holdings post-merger, the substantial increase in gross debt to $2.761 billion is a critical factor for stakeholders. The company's ability to service this debt, particularly in an environment of potential interest rate fluctuations, will be crucial for maintaining financial stability.
The targeted Adjusted EBITDA for 2024 indicates a positive outlook, projecting significant growth. However, the decrease in net income and free cash flow in the reported period, coupled with the decrease in Adjusted EBITDA margin for UFC from 60% to 58%, suggests that profitability is under pressure in the short term. The Free Cash Flow Conversion rate target exceeding 50% is a strong indicator that the company is focusing on generating cash from its operations, which is essential for reducing leverage and funding future growth initiatives.
Investors and analysts should closely monitor the company's capital expenditure, especially in light of the significant investment in WWE's new headquarters, to ensure that it aligns with long-term revenue and profitability goals. The ability of TKO Group Holdings to optimize its cost structure and successfully integrate the operations of UFC and WWE will be pivotal for achieving the forecasted financial targets.
The reported $34.2 million in costs related to certain litigation matters, including a $20.0 million charge for the settlement of an antitrust lawsuit at WWE, is a significant legal and financial consideration. While the resolution of such litigation provides clarity and can mitigate future risks, it also reflects the complex legal landscape in which large entertainment companies operate.
Legal scrutiny is likely to continue as TKO Group Holdings navigates the highly regulated sports entertainment industry, which involves multifaceted contracts, intellectual property rights and antitrust considerations. The company's proactive management of legal matters and compliance with regulatory requirements will be essential to minimize potential financial impacts and sustain investor confidence.
Moreover, the legal expenses incurred post-merger underscore the importance of due diligence and the assessment of contingent liabilities in merger and acquisition activities. Future legal costs and potential settlements could affect the company's financial position and should be factored into the overall assessment of the merger's long-term value creation.
TKO Transaction Highlights
On September 12, 2023, Endeavor and WWE closed the transaction to combine UFC and WWE to form a new, publicly listed company, TKO Group Holdings, Inc. The reported results presented in this earnings release cover the period from January 1, 2023 through December 31, 2023 for UFC and the period from September 12, 2023 through December 31, 2023 for WWE.
Full Year 2023 Highlights and Recent Developments
-
The UFC segment delivered record financial results. Revenue increased
13% to$1.3 billion 11% to$756 million -
UFC live events revenue increased
34% to a record$168 million -
UFC sponsorship revenue increased
18% to a record$196 million - 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% and22% , 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 outsidethe United States
Full Year 2024 Guidance
-
The Company is targeting revenue of
$2.57 5 billion$2.65 0 billion -
The Company is targeting Adjusted EBITDA of
$1.15 0 billion$1.17 0 billion -
The Company is targeting Free Cash Flow Conversion2 in excess of
50%
“TKO is off to a strong start following record financial performance in 2023 at both UFC and WWE,” said Ariel Emanuel, CEO of TKO. “We secured Anheuser-Busch as the official beer partner of UFC, delivered a transformative deal to bring WWE’s Raw to Netflix beginning in 2025, and expanded our international footprint in important growth markets. We have more conviction than ever in the combination of these businesses and TKO’s ability to drive topline growth and margin expansion, generate meaningful free cash flow, and deliver sustainable long-term value for shareholders.”
Full Year Consolidated Results
Revenue increased
Net Income was
Adjusted EBITDA1 increased
Cash flows generated by operating activities were
Free Cash Flow2 was
Cash and cash equivalents were
Results by Operating Segment3
The schedule below reflects TKO’s performance by operating segment:
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Three Months Ended |
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Twelve Months Ended |
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(in millions) |
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December 31, |
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December 31, |
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2023 |
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2022 |
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2023 |
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2022 |
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Revenue: |
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UFC |
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$ |
282.8 |
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$ |
271.7 |
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$ |
1,292.2 |
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$ |
1,140.1 |
|
WWE |
|
|
331.2 |
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|
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— |
|
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|
382.8 |
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— |
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Total Revenue |
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$ |
614.0 |
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$ |
271.7 |
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$ |
1,675.0 |
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$ |
1,140.1 |
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Adjusted EBITDA: |
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UFC |
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$ |
142.9 |
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$ |
154.1 |
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$ |
755.7 |
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$ |
680.6 |
|
WWE |
|
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141.0 |
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— |
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163.0 |
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— |
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Corporate |
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|
(60.7 |
) |
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(13.4 |
) |
|
|
(109.6 |
) |
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(51.9 |
) |
Total Adjusted EBITDA |
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$ |
223.2 |
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$ |
140.7 |
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$ |
809.1 |
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$ |
628.7 |
|
UFC
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Three Months Ended |
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Twelve Months Ended |
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(in millions) |
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December 31, |
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December 31, |
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2023 |
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2022 |
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2023 |
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2022 |
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UFC Revenue: |
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Media Rights & Content |
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$ |
168.1 |
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$ |
172.9 |
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$ |
870.6 |
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$ |
794.4 |
||||
Live Events |
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52.3 |
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45.5 |
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167.9 |
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125.3 |
||||
Sponsorship |
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48.3 |
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39.9 |
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196.3 |
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166.8 |
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Consumer Products |
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14.1 |
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13.4 |
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57.4 |
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53.6 |
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Total Revenue |
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$ |
282.8 |
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$ |
271.7 |
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$ |
1,292.2 |
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$ |
1,140.1 |
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Full Year 2023
Revenue increased
Adjusted EBITDA increased
Adjusted EBITDA margin decreased to
WWE
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Three Months Ended |
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Twelve Months Ended |
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(in millions) |
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December 31, |
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December 31, |
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2023 |
2022 |
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2023 |
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2022 |
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WWE Revenue: |
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Media Rights & Content |
|
$ |
212.2 |
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$ |
— |
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$ |
249.5 |
|
$ |
— |
Live Events |
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|
82.3 |
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— |
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87.7 |
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— |
Sponsorship |
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15.4 |
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— |
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18.0 |
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— |
Consumer Products |
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21.3 |
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— |
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27.6 |
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— |
Total Revenue |
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$ |
331.2 |
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$ |
— |
|
$ |
382.8 |
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$ |
— |
Full Year 2023
Revenue was
Including WWE activity for the periods from January 1, 2023 through September 11, 2023 and for the full year 2022, WWE combined revenue3 was
Adjusted EBITDA was
Including WWE activity for the periods from January 1, 2023 through September 11, 2023 and for the full year 2022, WWE combined Adjusted EBITDA3 was
Adjusted EBITDA margin was
Corporate
Full Year 2023
Corporate Adjusted EBITDA was a loss of
Including WWE activity for the periods from January 1, 2023 through September 11, 2023 and for full year 2022, Corporate combined Adjusted EBITDA3 was a loss of
Full Year 2024 Guidance
For the full year 2024, the Company is targeting revenue of
Management will provide more detail including key assumptions related to 2024 guidance on today’s earnings call.
TKO Transaction
As previously disclosed, on September 12, 2023, Endeavor Group Holdings Inc. (“Endeavor”) and World Wrestling Entertainment, LLC (“WWE”) closed the transaction to combine the Ultimate Fighting Championship (“UFC”) and WWE to form a new, publicly listed company, TKO Group Holdings, Inc. (“TKO”). For the twelve months ended December 31, 2023, the Company’s consolidated pre-tax results included
Other Matters
For the twelve-month period ended December 31, 2023, the Company’s consolidated pre-tax results included
Notes
(1) |
The definition of Adjusted EBITDA can be found in the Non-GAAP Financial Measures section of the release on page 7. A reconciliation of Net Income to Adjusted EBITDA for the three and twelve-month periods ended December 31, 2023 and 2022 can be found in the Supplemental Information in this release on page 14. |
(2) |
The definition of Free Cash Flow and Free Cash Flow Conversion can be found in the Non-GAAP Financial Measures section of the release on page 7. A reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow for the three and twelve-month periods ended December 31, 2023 and 2022 can be found in the Supplemental Information in this release on page 15. |
(3) |
An explanation of the basis of presentation can be found in this release on page 8. |
Non-GAAP Financial Measures
The Company refers to certain financial measures that are not recognized under
The Company defines Adjusted EBITDA as net income excluding income taxes, net interest expense, depreciation and amortization, equity-based compensation, merger and acquisition costs, certain legal costs, restructuring, severance and impairment charges, and certain other items when applicable. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by Revenue.
TKO management believes that Adjusted EBITDA is useful to investors as it eliminates the significant level of non-cash depreciation and amortization expense that results from its capital investments and intangible assets, and improves comparability by eliminating the significant level of interest expense associated with TKO’s debt facilities, as well as income taxes which may not be comparable with other companies based on TKO’s tax and corporate structure. Adjusted EBITDA and Adjusted EBITDA margin are used as the primary bases to evaluate TKO’s consolidated operating performance.
Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of TKO’s results as reported under GAAP. Some of these limitations are:
- they do not reflect every cash expenditure, future requirements for capital expenditures, or contractual commitments;
- Adjusted EBITDA does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on TKO’s debt;
- although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and Adjusted EBITDA and Adjusted EBITDA margin do not reflect any cash requirement for such replacements or improvements; and
- they are not adjusted for all non-cash income or expense items that are reflected in TKO’s statements of cash flows.
TKO management compensates for these limitations by using Adjusted EBITDA and Adjusted EBITDA margin along with other comparative tools, together with GAAP measurements, to assist in the evaluation of TKO’s operating performance.
Adjusted EBITDA and Adjusted EBITDA margin should not be considered substitutes for the reported results prepared in accordance with GAAP and should not be considered in isolation or as alternatives to net income as indicators of TKO’s financial performance, as measures of discretionary cash available to it to invest in the growth of its business or as measures of cash that will be available to TKO to meet its obligations. Although TKO uses Adjusted EBITDA and Adjusted EBITDA margin as financial measures to assess the performance of its business, such use is limited because it does not include certain material costs necessary to operate TKO’s business. TKO’s presentation of Adjusted EBITDA and Adjusted EBITDA margin should not be construed as indications that its future results will be unaffected by unusual or nonrecurring items. These non-GAAP financial measures, as determined and presented by TKO, may not be comparable to related or similarly titled measures reported by other companies. Set forth below are reconciliations of TKO’s most directly comparable financial measures calculated in accordance with GAAP to these non-GAAP financial measures on a consolidated basis.
The Company defines Free Cash Flow as net cash provided by operating activities less cash used for capital expenditures. TKO views net cash provided by operating activities as the most directly comparable GAAP measure. Free Cash Flow Conversion is defined as Free Cash Flow divided by Adjusted EBITDA. Although they are not recognized measures of liquidity under
Reconciliations of the Company’s Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Free Cash Flow Conversion guidance to the most directly comparable GAAP financial measures cannot be provided without unreasonable efforts and are not provided herein because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations and certain other items reflected in our reconciliation of historical Adjusted EBITDA and Free Cash Flow, the amounts of which, could be material.
Basis of Presentation
As a result of the timing of the consummation of the business combination on September 12, 2023, TKO’s consolidated financial information presented herein include UFC’s results for the three and twelve months ended December 31, 2023 and 2022, and only includes WWE’s results for the period from September 12, 2023 through December 31, 2023 following the closing of the transaction.
Information in this release includes results for the WWE segment and Corporate on a combined basis to include periods prior to the business combination. Information presented on a combined basis does not reflect any pro forma adjustments or other adjustments for costs related to integration activities, cost savings or synergies that have been or may be achieved if the business combination occurred on January 1, 2022.
Effective September 12, 2023, the Company operates its business under two reportable segments, UFC and WWE. The UFC segment consists entirely of the operations of the Company’s UFC business which was the sole reportable segment prior to the acquisition of WWE, while the WWE segment consists entirely of the operations of the WWE business acquired on September 12, 2023. In addition, it reports results for the “Corporate” group, which incurs expenses that are not allocated to the business segments. The Corporate group consists of general and administrative expenses that relate largely to corporate activities, including information technology, facilities, legal, human resources finance, accounting, treasury, investor relations, corporate communications, community relations and compensation to TKO’s management and board of directors, which support both reportable segments. Corporate expenses also include service fees paid by the Company to Endeavor under the Services Agreement. All prior period amounts related to the segment change have been retrospectively reclassified to conform to the new presentation. The profitability measure employed by the Company in assessing operating performance, including that of its segments, is Adjusted EBITDA. The Company defines Adjusted EBITDA as net income, excluding income taxes, net interest expense, depreciation and amortization, equity-based compensation, merger and acquisition costs, certain legal costs, restructuring, severance and impairment charges, and certain other items when applicable. Adjusted EBITDA includes amortization expenses directly related to supporting the operations of the Company’s segments, including content production asset amortization.
Additional Information
As previously announced, TKO will host a conference call at 5:00 p.m. ET on February 27, 2024, to discuss its full year 2023 results. All interested parties are welcome to listen to a live webcast that will be hosted through the Company’s website at investor.tkogrp.com. Participants can access the conference call by dialing 1-833-470-1428 (conference ID: 436087). Please reserve a line 5-10 minutes prior to the start time of the conference call.
Any accompanying materials referenced during the call will be made available on February 27, 2024, at investor.tkogrp.com. A replay of the call will be available approximately two hours after the conference call concludes and can be accessed on the Company’s website.
About TKO
TKO Group Holdings, Inc. (NYSE: TKO) is a premium sports and entertainment company that comprises UFC, the world’s premier mixed martial arts organization, and WWE, an integrated media organization and the recognized global leader in sports entertainment. Together, our organizations reach more than 1 billion households in approximately 170 countries, and we organize more than 350 live events year-round, attracting over one million fans. TKO is majority owned by Endeavor Group Holdings, Inc. (NYSE: EDR), a global sports and entertainment company.
Website Disclosure
Investors and others should note that TKO announces material financial and operational information to its investors using press releases, SEC filings and public conference calls and webcasts, as well as its Investor Relations site at investor.tkogrp.com. TKO may also use its website as a distribution channel of material information about the Company. In addition, you may automatically receive email alerts and other information about TKO, UFC and WWE when you enroll your email address by visiting the “Investor Email Alerts” option under the Resources tab on investor.tkogrp.com.
Forward-Looking Statements:
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding TKO’s business strategy and plans, financial condition, and anticipated financial or operational performance. The words “believe,” “may,” “will,” “estimate,” “potential,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “target,” and similar expressions are intended to identify forward-looking statements, though not all forward-looking statements use these words or expressions. These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees and involve known and unknown risks, uncertainties and other important factors that may cause actual results, performance or achievements to be materially different from what is expressed or implied by the forward-looking statements, including, but not limited to: TKO’s ability to generate revenue from discretionary and corporate spending on events; TKO’s dependence on key relationships with television and cable networks, satellite providers, digital streaming partners and other distribution partners; TKO’s ability to adapt to or manage new content distribution platforms or changes in consumer behavior; adverse publicity concerning the Company or its key personnel; the highly competitive, rapidly changing and increasingly fragmented nature of the markets in which TKO operates; financial risks with owning and managing events for which TKO sells media and sponsorship rights, ticketing and hospitality; risks related to the integration and realization of the expected benefits of the business combination of UFC and WWE; the Company’s substantial indebtedness; and other important factors discussed in the section entitled “Risk Factors” in TKO’s final prospectus on Form 424(b)(3) filed with the United States Securities and Exchange Commission (the “SEC”) on September 19, 2023, as any such factors may be updated from time to time in TKO’s other filings with the SEC, including, without limitation, TKO’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 to be filed by TKO, accessible on the SEC’s website at www.sec.gov and TKO’s investor relations site at investor.tkogrp.com. Forward-looking statements speak only as of the date they are made and, except as may be required under applicable law, TKO undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
TKO Group Holdings, Inc. Consolidated Income Statements (In millions, except per share data) (Unaudited) |
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Three Months Ended |
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Twelve Months Ended |
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December 31, |
|
December 31, |
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|
|
2023 |
|
|
2022 |
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|
2023 |
|
|
2022 |
|
||||
Revenue |
|
$ |
614.0 |
|
|
$ |
271.7 |
|
|
$ |
1,675.0 |
|
|
$ |
1,140.1 |
|
Operating expenses: |
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Direct operating costs |
|
|
212.3 |
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|
82.1 |
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|
514.6 |
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|
325.6 |
|
Selling, general and administrative expenses |
|
|
236.1 |
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|
54.4 |
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|
549.1 |
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|
210.1 |
|
Depreciation and amortization |
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|
102.7 |
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|
15.0 |
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|
164.6 |
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|
60.0 |
|
Total operating expenses |
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|
551.1 |
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|
151.5 |
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|
1,228.3 |
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|
595.7 |
|
Operating income |
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|
62.9 |
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|
120.2 |
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|
446.7 |
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|
544.4 |
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Other expenses: |
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Interest expense, net |
|
|
(66.6 |
) |
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|
(48.8 |
) |
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|
(239.0 |
) |
|
|
(139.6 |
) |
Other (expense) income, net |
|
|
1.4 |
|
|
|
(0.9 |
) |
|
|
(0.2 |
) |
|
|
(1.3 |
) |
(Loss) income before income taxes and equity losses of affiliates |
|
|
(2.3 |
) |
|
|
70.5 |
|
|
|
207.5 |
|
|
|
403.5 |
|
Provision for income taxes |
|
|
13.8 |
|
|
|
1.8 |
|
|
|
31.5 |
|
|
|
14.3 |
|
(Loss) income before equity losses of affiliates |
|
|
(16.1 |
) |
|
|
68.7 |
|
|
|
176.0 |
|
|
|
389.2 |
|
Equity losses of affiliates, net of tax |
|
|
— |
|
|
|
0.2 |
|
|
|
0.3 |
|
|
|
0.2 |
|
Net (loss) income |
|
|
(16.1 |
) |
|
|
68.5 |
|
|
|
175.7 |
|
|
|
389.0 |
|
Less: Net (loss) income attributable to non-controlling interests |
|
|
(10.8 |
) |
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|
0.1 |
|
|
|
(32.5 |
) |
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|
1.7 |
|
Less: Net income attributable to TKO Operating Company, LLC prior to the Transactions |
|
|
8.0 |
|
|
|
68.4 |
|
|
|
243.4 |
|
|
|
387.3 |
|
Net loss attributable to TKO Group Holdings, Inc. |
|
$ |
(13.3 |
) |
|
$ |
— |
|
|
$ |
(35.2 |
) |
|
$ |
— |
|
|
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||||
Basic and diluted net loss per share of Class A common stock |
|
$ |
(0.16 |
) |
|
|
N/A |
|
|
$ |
(0.43 |
) |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average number of common shares used in computing basic and diluted net loss per share |
|
|
82,735,036 |
|
|
|
N/A |
|
|
|
82,808,019 |
|
|
|
N/A |
|
TKO Group Holdings, Inc. Consolidated Balance Sheets (In millions) (Unaudited) |
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As of |
|||||
|
|
December 31, |
|
December 31, |
|||
|
|
2023 |
|
2022 |
|||
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
235.8 |
|
|
$ |
180.6 |
Accounts receivable, net |
|
|
135.4 |
|
|
|
45.4 |
Other current assets |
|
|
121.2 |
|
|
|
42.3 |
Total current assets |
|
|
492.4 |
|
|
|
268.3 |
Property, buildings and equipment, net |
|
|
608.4 |
|
|
|
175.0 |
Intangible assets, net |
|
|
3,563.7 |
|
|
|
475.8 |
Finance lease right-of-use assets, net |
|
|
255.7 |
|
|
|
— |
Operating lease right-of-use assets, net |
|
|
35.5 |
|
|
|
23.3 |
Goodwill |
|
|
7,666.5 |
|
|
|
2,602.6 |
Investments |
|
|
16.4 |
|
|
|
5.4 |
Other assets |
|
|
52.1 |
|
|
|
30.3 |
Total assets |
|
$ |
12,690.7 |
|
|
$ |
3,580.7 |
Liabilities, Non-controlling Interests and Stockholders'/Members' Equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
|
$ |
42.0 |
|
|
$ |
16.9 |
Accrued liabilities |
|
|
267.4 |
|
|
|
108.2 |
Current portion of long-term debt |
|
|
22.4 |
|
|
|
22.7 |
Current portion of finance lease liabilities |
|
|
8.1 |
|
|
|
— |
Current portion of operating lease liabilities |
|
|
4.2 |
|
|
|
1.8 |
Deferred revenue |
|
|
119.0 |
|
|
|
71.6 |
Other current liabilities |
|
|
9.0 |
|
|
|
9.0 |
Total current liabilities |
|
|
472.1 |
|
|
|
230.2 |
Long-term debt |
|
|
2,713.9 |
|
|
|
2,736.3 |
Long-term finance lease liabilities |
|
|
245.3 |
|
|
|
— |
Long-term operating lease liabilities |
|
|
32.9 |
|
|
|
22.6 |
Deferred tax liabilities |
|
|
372.9 |
|
|
|
— |
Other non-current liabilities |
|
|
3.0 |
|
|
|
12.8 |
Total liabilities |
|
|
3,840.1 |
|
|
|
3,001.9 |
Commitments and contingencies |
|
|
|
|
|
|
|
Redeemable non-controlling interests |
|
|
11.6 |
|
|
|
9.9 |
Stockholders'/Members' equity: |
|
|
|
|
|
|
|
Class A common stock |
|
|
— |
|
|
|
— |
Class B common stock |
|
|
— |
|
|
|
— |
Members capital |
|
|
— |
|
|
|
568.1 |
Additional paid-in capital |
|
|
4,244.5 |
|
|
|
— |
Accumulated other comprehensive (loss) income |
|
|
(0.3 |
) |
|
|
0.8 |
Accumulated deficit |
|
|
(135.2 |
) |
|
|
— |
Total TKO Group Holdings, Inc. stockholders’/members' equity |
|
|
4,109.0 |
|
|
|
568.9 |
Nonredeemable non-controlling interests |
|
|
4,730.0 |
|
|
|
— |
Total stockholders'/members' equity |
|
|
8,839.0 |
|
|
|
568.9 |
Total liabilities, nonredeemable non-controlling interests and stockholders'/members' equity |
|
$ |
12,690.7 |
|
|
$ |
3,580.7 |
TKO Group Holdings, Inc. Consolidated Statements of Cash Flows (In millions) (Unaudited) |
||||||||
|
|
|
|
|
|
|
||
|
|
Twelve Months Ended |
||||||
|
|
December 31, |
||||||
|
|
2023 |
|
|
2022 |
|
||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
||
Net income |
|
$ |
175.7 |
|
|
$ |
389.0 |
|
Adjustments to reconcile net income to net cash
|
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
164.6 |
|
|
|
60.0 |
|
Amortization and impairments of content costs |
|
|
23.8 |
|
|
|
14.5 |
|
Amortization of original issue discount and deferred financing cost |
|
|
10.6 |
|
|
|
10.6 |
|
Equity-based compensation |
|
|
57.1 |
|
|
|
23.7 |
|
Income taxes |
|
|
6.8 |
|
|
|
2.3 |
|
Equity losses of affiliates |
|
|
0.3 |
|
|
|
0.2 |
|
Net provision for allowance for doubtful accounts |
|
|
0.2 |
|
|
|
3.3 |
|
Other, net |
|
|
1.3 |
|
|
|
— |
|
Changes in operating assets and liabilities, net of acquisition: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
15.1 |
|
|
|
(26.4 |
) |
Other current assets |
|
|
11.6 |
|
|
|
10.0 |
|
Other noncurrent assets |
|
|
(17.1 |
) |
|
|
(16.7 |
) |
Accounts payable and accrued liabilities |
|
|
38.2 |
|
|
|
19.7 |
|
Deferred revenue |
|
|
(17.2 |
) |
|
|
10.7 |
|
Other liabilities |
|
|
(2.6 |
) |
|
|
0.8 |
|
Net cash provided by operating activities |
|
|
468.4 |
|
|
|
501.7 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
||
Purchases of property, buildings and equipment and other assets |
|
|
(48.6 |
) |
|
|
(12.4 |
) |
Investment in affiliates, net |
|
|
0.7 |
|
|
|
(0.8 |
) |
Cash acquired from WWE |
|
|
381.2 |
|
|
|
— |
|
Payment of deferred consideration in the form of a dividend to former WWE shareholders |
|
|
(321.0 |
) |
|
|
— |
|
Net cash provided by (used in) investing activities |
|
|
12.3 |
|
|
|
(13.2 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
||
Proceeds from borrowings |
|
|
100.0 |
|
|
|
— |
|
Repayment of long-term debt |
|
|
(133.4 |
) |
|
|
(82.6 |
) |
Repurchase of Class A common stock |
|
|
(100.0 |
) |
|
|
— |
|
Redemption of profit units |
|
|
— |
|
|
|
(2.9 |
) |
Payments for financing costs |
|
|
(0.3 |
) |
|
|
— |
|
Distributions to members |
|
|
(296.6 |
) |
|
|
(1,095.9 |
) |
Proceeds from principal shareholder contributions |
|
|
5.8 |
|
|
|
— |
|
Net cash used in financing activities |
|
|
(424.5 |
) |
|
|
(1,181.4 |
) |
|
|
|
|
|
|
|
||
Effects of exchange rate movements on cash |
|
|
(1.0 |
) |
|
|
(1.2 |
) |
|
|
|
|
|
|
|
||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
|
|
55.2 |
|
|
|
(694.1 |
) |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
|
|
180.6 |
|
|
|
874.7 |
|
CASH AND CASH EQUIVALENTS, END OF PERIOD |
|
$ |
235.8 |
|
|
$ |
180.6 |
|
SUPPLEMENTAL CASH FLOW INFORMATION: |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
226.5 |
|
|
$ |
118.3 |
|
Cash payments for income taxes |
|
$ |
23.2 |
|
|
$ |
14.8 |
|
NON-CASH INVESTING AND FINANCING TRANSACTIONS: |
|
|
|
|
|
|
||
Purchases of property and equipment recorded in accrued expenses and accounts payable |
|
$ |
22.8 |
|
|
$ |
3.8 |
|
Acquisition of WWE, net of deferred considerations |
|
$ |
8,111.1 |
|
|
$ |
— |
|
Accretion of redeemable non-controlling interests |
|
$ |
— |
|
|
$ |
(1.5 |
) |
Capital contribution from parent for equity-based compensation |
|
$ |
18.6 |
|
|
$ |
23.7 |
|
Principal stockholder contributions |
|
$ |
9.0 |
|
|
$ |
— |
|
Convertible notes exchanged for common stock |
|
$ |
4.2 |
|
|
$ |
— |
|
TKO Group Holdings, Inc. Reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin (In millions, except percentages) (Unaudited) |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
|||||||||||
|
|
December 31, |
|
|
December 31, |
|
|||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
2022 |
|
||||||
Net (loss) income |
|
$ |
(16.1 |
) |
|
|
$ |
68.5 |
|
|
$ |
175.7 |
|
|
$ |
389.0 |
|
Provision for income taxes |
|
|
13.8 |
|
|
|
|
1.8 |
|
|
|
31.5 |
|
|
|
14.3 |
|
Interest expense, net |
|
|
66.6 |
|
|
|
|
48.8 |
|
|
|
239.0 |
|
|
|
139.6 |
|
Depreciation and amortization |
|
|
102.7 |
|
|
|
|
15.0 |
|
|
|
164.6 |
|
|
|
60.0 |
|
Equity-based compensation expense (1) |
|
|
21.0 |
|
|
|
|
5.6 |
|
|
|
57.1 |
|
|
|
23.7 |
|
Merger and acquisition costs (2) |
|
|
1.3 |
|
|
|
|
— |
|
|
|
83.8 |
|
|
|
— |
|
Certain legal costs (3) |
|
|
27.4 |
|
|
|
|
0.2 |
|
|
|
34.2 |
|
|
|
0.8 |
|
Restructuring, severance and impairment (4) |
|
|
6.4 |
|
|
|
|
— |
|
|
|
21.5 |
|
|
|
— |
|
Other adjustments (5) |
|
|
0.1 |
|
|
|
|
0.8 |
|
|
|
1.7 |
|
|
|
1.3 |
|
Total Adjusted EBITDA |
|
$ |
223.2 |
|
|
|
$ |
140.7 |
|
|
$ |
809.1 |
|
|
$ |
628.7 |
|
Net (loss) income margin |
|
|
(3 |
)% |
|
|
25 |
% |
|
|
10 |
% |
|
|
34 |
% |
|
Adjusted EBITDA margin |
|
|
36 |
% |
|
|
52 |
% |
|
|
48 |
% |
|
|
55 |
% |
|
(1) |
Equity-based compensation represents primarily non-cash compensation expense for awards issued under Endeavor’s 2021 Plan subsequent to its April 28, 2021 IPO, for the Replacement Awards and for awards issued under the 2023 Incentive Award Plan. For the three and twelve months ended December 31, 2023, equity-based compensation includes |
(2) |
Includes certain costs of professional fees and bonuses related to the TKO transaction and payable contingent on the closing of the TKO transaction. |
(3) |
Includes costs related to certain litigation matters including antitrust matters for UFC and WWE, matters where Vincent K. McMahon has agreed to make future payments to certain counterparties personally and, for the three and twelve months ended December 31, 2023, the settlement of a WWE antitrust matter for |
(4) |
For the three and twelve months ended December 31, 2023 includes costs resulting from the Company’s cost reduction program. For more information, please refer to the Company’s various filings with the SEC, including, but not limited to, Note 17, Restructuring Charges, of its Form 10-K for the year ended December 31, 2023. |
(5) |
For the three and twelve months ended December 31, 2023, other adjustments was comprised primarily of losses of |
TKO Group Holdings, Inc. Reconciliation of Free Cash Flow (In millions) (Unaudited) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
|
|
December 31, |
|
December 31, |
||||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Net cash provided by operating activities |
|
$ |
220.7 |
|
|
$ |
124.9 |
|
|
$ |
468.4 |
|
|
$ |
501.7 |
|
Less cash used for capital expenditures: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Purchases of property, buildings and equipment
|
|
|
(36.0 |
) |
|
|
(2.9 |
) |
|
|
(48.6 |
) |
|
|
(12.4 |
) |
Free Cash Flow |
|
$ |
184.7 |
|
|
$ |
122.0 |
|
|
$ |
419.8 |
|
|
$ |
489.3 |
|
| (1) |
Purchases of property, buildings and equipment and other assets includes approximately |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240227867298/en/
Investors:
Seth Zaslow szaslow@tkogrp.com
Media:
press@tkogrp.com
Source: TKO Group Holdings, Inc.
FAQ
What was the revenue increase for UFC in 2023?
What was the percentage increase in Adjusted EBITDA for UFC in 2023?
What was the percentage increase in live event average attendance for WWE?
What revenue target is TKO aiming for in 2024?
