Endeavor-Owned TKO Posts 29% Rise In Revenue In Q2

Endeavor-owned TKO Group Holdings, the company formed from the merger last year of the UFC and the WWE, reported a 29% rise in revenue in the second quarter.

Adjusted EBITDA, a gauge of profitability, increased 23% to $231.9 million.

The revenue uptick to $394.4 million was mainly driven by a surge in media rights and content revenue, higher live events revenue thanks to an additional event occurring in the quarter, and improved sponsorship proceeds.

The company’s financials in the quarter ended June 30 are compared with pro-forma results from the WWE and UFC when they were separate. In recent months, Endeavor has decided to go private after three years as a public company and let TKO be its publicly traded vehicle.

The UFC is getting set for what is expected to be a lucrative media rights negotiation of rights currently held by Disney-ESPN. That $1.5 billion agreement is set to expire in 2025, as is the WWE’s streaming arrangement with NBCUniversal’s Peacock. After the NBA and NFL set decade-long extensions, along with college sports and others, TKO’s set of rights are expected to be the most valuable ones still available.

On the downside for TKO, a judge last month nixed a $335 million settlement it had reached with UFC fighters in a class-action lawsuit, setting a trial date. If the case does proceed to trial, it could potentially cost the company several times that settlement amount.

On the bottom line, the increase in revenue was partially offset by an increase in expenses. Direct expenses increased primarily due to higher production, marketing and athlete costs as well as an increase in direct costs of revenue due to one additional event compared to the year-ago quarter. Selling, general and administrative expenses were essentially flat as compared to the prior year period, the company said.

“TKO generated strong financial results in the quarter, highlighted by record quarterly revenue and

Adjusted EBITDA,” TKO CEO Ariel Emanuel (who also heads Endeavor) said in the earnings release. “In light of this continued momentum, we are raising our full-year 2024 guidance for the second quarter in a row. The strength in our underlying business continues to give us great conviction in TKO’s ability to deliver sustainable long-term value for shareholders.”