On Tuesday, TKO Group Holdings announced their third quarter of 2023 earnings report. These revenue results are for UFC from July 1st to September 30th, 2023. WWE was associated from September 12th.
The company generated $449.1 million in revenue for the third quarter, which was an increase of 32% in the same quarter of 2022. The net income was $22 million. a decrease from $129.7 million in the third quarter of last year.
According to the financial report, an increase in operating expenses such as professional fees, bonuses related to the TKO transaction, and charges associated with restructuring activities are reasons for the decrease.
TKO paid a special one-time cash dividend of $3.86 per share for all the Class A common stockholders on September 29th.
TKO Reports Third Quarter 2023 Results
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.
- On September 13, 2023, the Company declared a special one-time cash dividend of $3.86 per share of Class A common stock, which was paid on September 29, 2023
Third Quarter 2023 Financial Highlights
- Revenue of $449.1 million
- Net income of $22.0 million
- Adjusted EBITDA1 of $239.7 million
- These results cover the period from July 1, 2023 through September 30, 2023 for UFC and the period from September 12, 2023 through September 30, 2023 for WWE
Third Quarter 2023 Operational Highlights and Recent Developments
- 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 entering 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
- In October, 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
- In October, 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
Third-Quarter Consolidated Results
Revenue increased 32%, or $108.4 million, to $449.1 million, due to an increase of $56.8 million at UFC and the contribution of $51.6 million of revenue at WWE associated with the period from September 12, 2023 through September 30, 2023.
UFC’s revenue was $397.5 million. WWE’s revenue for the period from September 12, 2023 through September 30, 2023 was $51.6 million. WWE’s combined revenue for the period from July 1, 2023 through September 30, 2023 was $287.3 million.
Net Income was $22.0 million, a decrease from $129.7 million, primarily reflecting the increase in revenue offset by an increase in operating expenses. The increase in operating expenses primarily reflected an increase in selling, general and administrative expenses of $136.7 million, including professional fees and bonuses related to the TKO transaction and charges associated with restructuring activities. To a lesser extent, higher interest expense and depreciation and amortization also contributed to the decrease in net income.
Adjusted EBITDA1 increased 26%, or $49.2 million, to $239.7 million, due to an increase of $33.8 million at UFC and the contribution of $22.0 million of Adjusted EBITDA at WWE associated with the period from September 12, 2023 through September 30, 2023 partially offset by an increase of $6.6 million in corporate expenses.
UFC’s Adjusted EBITDA was $238.3 million. WWE’s Adjusted EBITDA for the period from September 12, 2023 through September 30, 2023 was $22.0 million. WWE’s combined Adjusted EBITDA for the period from July 1, 2023 through September 30, 2023 was $102.0 million. Corporate Adjusted EBITDA for the period from September 12, 2023 through September 30, 2023 was ($20.6) million. Corporate combined Adjusted EBITDA for the period from July 1, 2023 through September 30, 2023 was ($42.1) million.
Cash flows generated by operating activities were $67.0 million, a decrease of $71.3 million from $138.3 million, primarily due to lower net income.
Free Cash Flow2 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 as of September 30, 2023. Gross debt was $2.773 billion as of September 30, 2023.