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Presentation

TKO Group Holdings, Inc. beats earnings expectations. Reported EPS is $0.28, expectations were $0.16.

Operator: Good afternoon, and thank you for joining the TKO Fourth Quarter and Full Year 2024 Earnings Call. My name is Kate, and I will be the moderator for today’s call. At this time, all lines are in a listen-only mode and will be until the question-and-answer portion. [Operator Instructions] I would now like to turn the call over to Seth Zaslow, Head of Investor Relations at TKO. Please proceed.

Seth Zaslow: Good afternoon, and welcome to TKO’s fourth quarter and full year 2024 earnings call. A short while ago, we issued a press release, which you can view on our Investor Relations website. A recording of this call will also be available via our website for at least 30 days. After prepared remarks from Ari Emanuel, TKO’s Executive Chair and Chief Executive Officer; and Andrew Schleimer, TKO’s Chief Financial Officer, we’ll open the call for questions. Mark Shapiro, our President and Chief Operating Officer; and Andrew, will be handling the Q&A. The purpose of this call is to provide you with information regarding our fourth quarter and full year 2024 performance. I want to remind everyone that the information discussed will include forward-looking statements and/or projections that involve risks, uncertainties and assumptions.

Please see our filings with the Securities and Exchange Commission for further detail. If these risks or uncertainties were to materialize or any assumptions prove incorrect, our results may differ materially from those expressed or implied on this call. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new information or future events, except as legally required. Our commentary today will also include non-GAAP financial measures, which we believe provide an additional tool for investors to use in evaluating ongoing operating results and trends. These measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

Reconciliations between GAAP and non-GAAP metrics can be found in our press release issued today as well as the information posted on our IR website. With that, I’ll now turn the call over to Ari.

Ari Emanuel: Thanks, Seth. The fourth quarter capped off a milestone year for TKO, one that showcased the strength, unique value and demand of our premium IP. In our first full year as a public company, we delivered record financial performance. In 2024, the integration of UFC and WWE proved out, driving greater efficiency across the top line as well as exceeding our guided net savings of $100 million. We strengthened our media rights portfolio by securing partnerships that will undoubtedly expand our universal reach and engagement. For starters, moving Raw, our premier WWE franchise, to Netflix will put us in front of the streamers, 300 million subscribers, week in and week out, and serve to be transformative to our business.

Our January launch at the Intuit Dome in Los Angeles was a spectacle, and our Monday night episode since have consistently landed in Netflix’s weekly Top 10 across the U.S. and the globe. We have also successfully transitioned WWE SmackDown to USA Network and NXT to the CW, driving significant audience growth as a result. In particular, the CW’s Tuesday night time slot saw a nearly 100% increase in fourth quarter total viewership over the prior year period, with even stronger gains in the key 18 to 34 demographic. From year-to-date, NXT is up 12% compared to USA’s 2024 average. Turning to our live events. UFC and WWE both had record-breaking years and set multiple all-time highs for ticket sales, attendance and gate revenues worldwide. UFC delivered 10 all-time highest grossing event records in 2024, with five of those now ranking among the biggest in UFC history.

Similarly, WWE had its most successful year for live events and set revenue records at 10 premium live events. Within the fourth quarter specifically, UFC closed out the year with back-to-back record-setting live events. We hosted our highest grossing North American Fight Night ever in Tampa, and UFC 309 at Madison Square Garden cemented UFC’s place as a cornerstone franchise for the world’s most famous arena. UFC now holds seven of the top 10 highest grossing event records in MSG history. At WWE, we set more than 40 individual market records for ticket sales and paid attendance in the quarter. Bad Blood in Atlanta delivered the largest gross ticket sales for a U.S. arena event in WWE history. Additionally, Survivor Series in Vancouver set the largest North American arena gate in WWE history since topped by Raw’s blockbuster debut with Netflix at the Intuit dome, and Saturday night’s main event returned with a sold-out crowd that set a WWE gate record for New York’s Nassau Coliseum and reached more than 3 million U.S. households across NBC and Peacock.

Throughout the year, we continued to convert demand into high-margin revenue, particularly through site fees, with approximately 1/3 of UFC and WWE’s marquee live events attracting incentive packages. Across our global brand partnerships, UFC sponsorship revenue grew 28% for the full year, marking our seventh consecutive record-breaking year. We announced IBM as another blue-chip partner, following major UFC agreements with Anheuser-Busch and Riad season, and that momentum has continued into 2025 with the recent announcement of our Monster Energy renewal, UFC’s largest-ever partnership. WWE also set an all-time high in sponsorship revenue, growing 20% year-over-year when looking at WWE’s full year 2023, driven primarily by growth across our premium live events portfolio as well as by new long-term brand partnerships and innovative in ring placements.

All told, these results highlight the power of our integrated model, the global popularity of UFC and WWE, and the increasing demand for premium live sports and entertainment. As we move into 2025, we remain focused on sustaining our progress and delivering on our KPIs, with our domestic rights renewals for UFC and WWE’s premium live events, our highest priority. We’re also taking important steps to return capital to shareholders under the dividend and share repurchase program we announced in October. Finally, we expect to close our acquisitions of IMG, On Location and PBR in the first quarter, expanding our global sports portfolio. Make no mistake about it, these industry-leading businesses will also help power WWE and UFC, benefiting both our loyal fan bases and our shareholders.

Our immediate focus after the close will be on a quick and seamless integration. I would add that this work is actually already underway. Earlier today, we announced an agreement with the Kansas City Sports Commission for UFC, WWE and PBR to hold three consecutive live events in April at the city’s T-Mobile Center. This TKO Takeover showcases the collective power of our properties in the marketplace. Looking ahead, we are laser-focused on expanding our audience, deepening our partnership bench and maximizing shareholder value. We have the right strategy, the right leadership, and a proven ability to execute. With our eyes squarely focused on driving revenue across multiple business lines, expanding our margins and strong free cash flow conversion, we’ve never been more excited about what lies ahead for TKO.

With that, I’ll turn the call over to Andrew, and then Mark will join us.

Andrew Schleimer: Good afternoon. Today, I’m going to review our financial performance for the previous quarter and full year and then discuss our outlook for 2025. As Ari highlighted, 2024 was a record year for UFC and WWE, both in terms of revenue and adjusted EBITDA. We delivered strong operating performance, and we expect positive momentum in our businesses to continue this year. Last year, we generated revenue of $2.804 billion and adjusted EBITDA of $1.251 billion, both of which exceeded the revised guidance we provided on our last earnings call. Our adjusted EBITDA margin was 45%. To assist with comparability, we’ve presented supplemental financial information in our press release and Investor Relations website that includes WWE activity and a portion of WWE related to the corporate group for the period from January 1 through September 11, 2023.

Including WWE activity for January 1 through September 11, 2023, combined revenue was $2.619 billion. Combined adjusted EBITDA was $1.092 billion and our combined adjusted EBITDA margin was 42%. Inclusive of these amounts, revenue increased 7%, adjusted EBITDA increased 15% and adjusted EBITDA margin increased approximately 300 basis points. In our first full year as a public company, we clearly demonstrated the industrial logic of combining these two highly complementary businesses. Our strategy is working. While we made significant progress on achieving revenue and cost synergies, including exceeding our target of $100 million on a net basis, we remain laser-focused on unlocking additional efficiencies as we continue to integrate these businesses.

Moving to the fourth quarter. Reported results included three months of activity for both UFC and WWE. We generated revenue of $642 million, adjusted EBITDA was $238 million and our adjusted EBITDA margin was 37%. Revenue increased 5%, adjusted EBITDA increased 7% and adjusted EBITDA margin increased approximately 100 basis points compared to the prior year. Our UFC segment generated revenue of $344 million in the quarter, an increase of 22% or $61 million. Adjusted EBITDA was $178 million, an increase of 25% or $35 million. UFC’s adjusted EBITDA margin was 52%, an increase from 51% in the prior year period. As expected, revenue benefited from the timing of the events calendar. UFC had 10 total events, including four numbered events compared to nine total events, including three numbered events in the prior year period.

Media rights and content revenue increased 18% to $198 million. The increase was primarily driven by the additional numbered event. As we’ve discussed in the past, numbered events carry a higher allocation of fixed media revenue as compared to fight nights. The contractual escalation of media rights fees also contributed to the increase in media rights and content revenue. Live Events revenue increased 24% and to $65 million. Ticket sales reflected the benefit of the additional numbered event as well as strong underlying trends in pricing and attendance for high-profile events, such as USC 309 at Madison Square Garden, which was the second highest grossing event in MSG history. Site fees in the quarter were comparable to the prior year as both periods included a number event held in Abu Dhabi as part of our multiyear partnership with the Department of Culture and Tourism.

Sponsorship revenue increased 39% to $67 million. The increase was driven by new partnerships and renewals as well as the favorable event mix. Adjusted EBITDA reflected the increase in revenue, partially offset by an increase in expenses. Direct operating expenses increased primarily due to higher production, marketing, athlete costs and direct cost of revenue due to the additional numbered event and the mix of fight nights. In the quarter, we held one additional Fight Night overseas and one less event at Apex compared to the prior year period. SG&A increased primarily due to higher cost of personnel as compared to the prior year period. Our WWE segment generated revenue of $298 million in the quarter, a decrease of 10% or $33 million. Adjusted EBITDA was $114 million, a decrease of 19% or $27 million.

Adjusted EBITDA margin was 38%, down from 43% in the prior year period. As expected, the decrease in revenue reflected the short-term domestic rights deal we reached for Raw, which had an unfavorable impact of approximately $50 million on both revenue and adjusted EBITDA as compared to Q4 2023. As a reminder, this was purely timing related. In January, our long-term agreement with Netflix to distribute Raw commenced. As Ari noted, this partnership is off to a fantastic start. Media rights and content revenue decreased 26% to $156 million. The decrease was primarily related to the short-term deal for Raw as well as a decrease in third-party original programming due to the timing of delivery. Live events revenue increased 13% to $93 million. As with UFC, we continue to see strong underlying trends for WWE live events.

The increase was primarily related to an increase in ticket sales. Results in both the current and prior year also include a site fee related to a premium live event in Saudi Arabia. Sponsorship revenue increased 48% to $23 million, due to new partnerships and renewals across multiple categories, including gaming and retail, among others. Of note, our PLEs were highly successful. Survivor Series grossed its highest ever partnership income, and Bad Blood was up nearly 100% versus the prior year PLE during the same time frame. Adjusted EBITDA reflected the decrease in revenue, partially offset by a decrease in expenses. The decrease in expenses primarily reflected lower personnel and production costs related to our planned cost reduction initiatives implemented following our formation.

Corporate expenses were $55 million in the quarter, a decrease of $6 million from the prior year period. The decrease was primarily due to savings from our cost reduction program. These savings were partially offset by an increase in service fees that UFC and WWE paid to Endeavor, which commenced for WWE in March of 2024. Now moving on to our capital structure. In 2024, we generated $509 million of free cash flow. Our free cash flow conversion of adjusted EBITDA was 41%, in line with our guidance of in excess of 40%. Free cash flow included $75 million of capital expenditures, approximately $31 million of which related to WWE’s new headquarters, which is now completed. For the fourth quarter, we generated $37 million of free cash flow, including $20 million of capital expenditures, approximately $2 million of which was related to WWE’s new headquarters, and $4 million of which was related to UFC’s Apex expansion.

Free cash flow for both the fourth quarter and the full year was negatively impacted by the first installment payment under the settlement agreement for the UFC antitrust case and $32 million of debt transaction costs and incremental cash interest associated with the refinancing of our credit facility. As previously disclosed, in November, we refinanced our existing credit facility. In connection with the refinancing, we entered into a new seven-year $2.75 billion term loan and a new five-year $205 million revolver. The refinancing not only extended the maturities on the term loan and the revolver, but is also expected to result in a reduction of approximately $20 million of annual interest payments. We ended the year with $2.78 billion in debt and $526 million in cash and cash equivalents.

Given the strength of our balance sheet and financial profile, the implementation of a robust and sustained capital return program has and will continue to be a top priority for us. As we announced in October, our Board of Directors authorized a share repurchase program of up to $2 billion of our Class A common stock. We expect the program to commence in the second or third quarter of this year. Our timing and level of activity will be subject to market conditions and various other factors. We also announced that our Board authorized a $75 million quarterly cash dividend. Pursuant to this, holders of TKO Class A common stock will receive their pro rata share of distributions. Earlier today, we issued a press release announcing that the inaugural dividend will be made on March 31, in the amount of $0.38 per share, to shareholders of record as of the close of business on March 14.

Now turning to our outlook. As we have discussed in the past, we manage the business with a focus on full year performance. Therefore, we believe results are best evaluated on a full year basis, given the quarterly fluctuations that are inherent in our operations related to the timing of our events and content deliveries, among other items. For full year 2025, we’re targeting revenue of $2.93 billion to $3.0 billion and adjusted EBITDA of $1.35 billion to $1.39 billion. There are four notable drivers of this outlook that are important to underscore. Number one, in connection with the commencement of the Netflix deal in January, our 2025 financials will include the step-up as well as a full year of media rights fees from our new long-term agreement for Raw.

Number two, in early January, we announced that the January 2026 Royal Rumble will be hosted in Riyadh, Saudi Arabia. This marks the first time in the event’s nearly 40-year history that it will be hosted outside of North America. As a result, our guidance for 2025 includes one PLE in Saudi Arabia compared to two PLEs in 2024. This results in an unfavorable impact to our 2025 plan of approximately $55 million of total company revenue, equating to approximately 200 basis points of revenue growth and approximately 50 basis points on a full year total company adjusted EBITDA margin. For the avoidance of doubt, this item is purely timing related as we expect to host three PLEs in Saudi Arabia in 2026, including Royal Rumble. Number three, staying on the topic of site fees, we continue to see meaningful momentum in this area of our business at both UFC and WWE.

We expect 2025 to benefit from the site fees in connection with WrestleMania in Las Vegas in April, Summer Slam at MetLife Stadium in New Jersey in August and various UFC events in the Middle East and Asia Pacific regions. Most recently, we have also renewed our partnership with Tourism Western Australia to bring multiple UFC and WWE events to Perth over the next two years. More to come on this in the near future. As a result of our progress, excluding the timing shift of the Saudi PLE I discussed a moment ago, we anticipate meaningful growth year-over-year in site fees in 2025. Number four, the mix of events, particularly at UFC. Consistent with our goal of continuing to grow UFC’s fan base and engagement, in 2025, we expect to hold fewer events at Apex in Las Vegas.

While the calendar for the full year isn’t yet finalized, we expect to host a higher number of international events as compared to 2024. While these events are expected to result in increased revenue, they have a lower margin profile as compared to Apex events. In addition to these four items, we continue to focus on realizing revenue synergies, cost savings and efficiencies, which all could be incremental to our plan. Moving to the acquisition of IMG, On Location and PBR. As Ari highlighted, the close of this transaction is quickly approaching. Upon closing, Endeavor is expected to own approximately 61% of TKO through its holdings of TKO Class A shares and TKO OpCo common units. Since we announced this acquisition in October, we’ve been hard at work planning for the integration of these businesses.

We remain extremely excited about combining these assets with UFC and WWE. That said, the 2025 outlook we provided does not include any activity related to IMG, On Location or PBR. Subsequent to the close of the deal, we intend to issue recast financial statements, which will include results for the acquired businesses. We expect the financials for the years ended 2022 and 2023 to be available by the end of March, and the financials for 2024 to be available on or around our first quarter earnings call. Based on this time line, we expect to be in a position to update our 2025 outlook to include the acquired businesses as well as the associated transaction impacts on that same call-in early May. We’ll address the accounting for the acquisition in more detail on our first quarter earnings call, but we did want to highlight that the transaction will be accounted for as a merger between entities under common control due to Endeavor’s control of TKO as well as IMG, On Location and PBR.

As a result, we’ll report a full 12 months of activity for 2025, even though we will only own and control the businesses for a shorter period. Consistent with our prior calls, while we are not providing quarterly guidance, we want to highlight a few notable items as we look to the first quarter. At UFC, results will reflect the mix of events in the quarter. Live events revenue will include a site fee from the Fight Night held in Saudi Arabia earlier this month. As I mentioned earlier in my remarks, we also expect expenses to reflect two additional international Fight Nights and two fewer Apex events compared to the prior year period. At WWE, we expect live events and sponsorship revenue to continue to reflect the momentum we’re seeing in the business.

With respect to media rights and content revenue, results are expected to reflect the expansion of SmackDown to a three-hour format for the first half of the year. This is purely timing related. It results in a shift in the quarterly revenue recognition, but has no impact on the full year amount. In terms of expenses, similar to UFC, WWE results are expected to reflect the impact of additional international events compared to the prior year period. As we previously announced, for the first time ever, the road to WrestleMania will include an 11-city tour across the U.K. and Europe over three weeks in March. In terms of free cash flow, full year 2025 free cash flow is expected to reflect the unfavorable impact of $250 million of payments related to the UFC antitrust lawsuit settlement as well as payments for professional fees related to the acquisition of IMG, On Location and PBR.

Excluding these approximately $300 million of nonrecurring amounts, our targeted free cash flow conversion rate would be in excess of 60%. Consistent with the outlook for 2025 revenue and adjusted EBITDA, our comments regarding free cash flow do not include any activity related to IMG, On Location or PBR. In conclusion, we generated strong financial results in 2024 that reflected continued momentum at both of our businesses, which are implicit in our strong 2025 guidance and trends we’ve just articulated, and we are extremely excited about our prospects for this year and beyond. With that, I’ll turn it back to Seth.

Seth Zaslow: Thanks, Andrew. Operator, we’re ready to open the call for questions.

Operator: We will now begin the question-and-answer session. [Operator Instructions] The first question will come from the line of Brandon Ross with LightShed Partners. Brandon, your line is now open.

Brandon Ross: I figured I’d start with what’s most meaningful to your stock, which is going to be the UFC domestic deals. And I know you’re in the exclusive period now with Disney. Do you expect the deal to get done within this window? Have you brought others into the window? And what are your latest thoughts overall on one versus multiple partners for this deal?

Mark Shapiro: Thanks, Brandon. Good to hear from you today. I would just tell you that, as you said, we’re currently in our exclusive negotiating window with Disney and ESPN. The window opened on January 15. It will last 90 days. When we look at the outlook for renewal, I’d remind you that the market for premium content, despite ESPN shedding MLB and F1, is hot. It’s quite strong. The content — our content, in particular, TKO, is unique because not only do we own and control it, but it’s year out. There’s no off-season. Our content, both at UFC and WWE for that matter, has an urgency, and the urgency allows us to attract subs and viewers and also gives us a consistency to retain subs and viewers, reduce churn. Obviously, these are appealing attributes for buyers of content, particularly with the streaming services, which is what it’s all about these days.

When it comes to our overall deal, one package, two packages, half packages, four packages, NASCAR style, whatever it might be, we’re focused on doing what’s best for the business in the long term. So that means a balance between maximizing our reach and engagement and monetization.

Brandon Ross: Great. And this one might be a little out of box. But with Trump in charge, there’s clearly a lot of change. And we’ve heard some speculation about a potential repeal of the Ali Act. I wanted to get your thoughts on that. And to what extent your boxing plans would be dependent on such a appeal?

Mark Shapiro: Look, the Ali Act has flaws. We believe it is actually possible to improve the current system to facilitate more opportunities for boxers and to regrow the sport of boxing in America. That’s where we’re at. We’re not in there active, inside, pushing, drafting legislation, lobbying legislators, that’s ultimately for somebody else. Whether it stays or goes, we think the opportunity for boxing is extraordinary for us in particular. We can talk about that if someone else pings that question. But it’s a clear opportunity, and we are chasing it. I would also tell you, and not to leave out one part of your question with regard to getting in or out of the window. Who knows, it’s early days. I mean Disney, ESPN has been a great partner.

I think we’ve been very vocal in terms of how much we enjoy partnering with them, how much it’s helped their strategy vis-a-vis the transition from linear to streaming and just keeping linear strong. And at the same time, how much it’s helped our brand, Bob Iger, Jimmy Pitaro, phenomenal partners running great businesses, serving sports fans around the world. We like where we’re at. We’d love to stay with them as long as we’re realizing fair value for our content. And we think in this window, our content is premium plus.

Brandon Ross: Here’s your follow-up on the boxing. What are your plans? And then I’ll shut up.

Mark Shapiro: Tremendous. I’m really glad that you asked. Look, I would tell you that — look, our primary focus, I don’t want to get away from that, is continuing to drive value to our core business. And our core business, even with adding the Endeavor assets of IMG, On Location and PBR, make no mistake about it, our core business is UFC and WWE. And we’re focused on the integration of IMG, On Location and PBR, both as stand-alone businesses, but also to help power and fuel our two battleships that are UFC and WWE. When it comes to other opportunities, we’re going to — we intend to be selective, disciplined, thoughtful, but we will consider other opportunities to create long-term value for our shareholders as they present themselves, but they must be value accretive.

When you look at boxing, it checks the boxes of all of that. It’s thoughtful. It’s the right strategic place for us to be. We have experts in Nick Khan and Dana White, among others that can drive that business. We can be selective in terms of how we participate. And whatever we do, we will not take risk and it will definitely be value accretive. I would tell you that there’s still strong interest in the sport around the globe and particularly the U.S. Now Tyson and Jake Paul on Netflix isn’t the best example because come on, even the casual viewer wanted to see that because everybody wanted to see Mike Tyson back in the ring. But that event in November of ’24 attracted 100 million worldwide viewers and 65 million worldwide concurrent streams with just about 40 million of those in the U.S. So, there’s an audience for boxing and there’s a dearth of boxing on the national platform, and there’s a desire to have it back in the forefront of the American sports ecosystem.

It’s just been broken for too long. It’s been fragmented. It’s been poorly managed, and we think we can do a lot with it. What I would tell you in terms of our specific opportunities, which we’ve spoken to, everybody knows we’re in talks with the Saudis. But to give you a little more color, I will tell you that we are close on an agreement with the Saudis on the creation of a boxing league, where we, TKO, would be the producer, the promoter and responsible for all day-to-day operations of the venture, whereby we would receive a fee of $10 million plus. Again, we’re not putting any money in. We’re not putting capital in. We’re not on the hook for any CapEx. Additionally, we would have some earn-in equity over time, specifically over a five-year period, but it would be dependent on us achieving certain milestones, including us exceeding Board-approved annual budgets over those five years.

So, we’ve just sent a delegation to London to meet with the Saudi delegation led by Andrew Schleimer, our CFO; and Nick Khan, of course, who runs the UFC; and Lawrence — or excuse me, WWE; and Lawrence Epstein, who runs the UFC, and they had a full-day meeting earlier this week, and we’re getting awfully close. And when we have something official, we’ll come out. But I think I’ve given you at least the framework of what the deal would be, its own league and we’d have consistent fights throughout the year. I think on top of that, you should know that as part of the partnership, we would be the promoter, producer and event operator of four large scale, kind of super fights, as I call them, that would air really probably two this year and two in 2025.

Those may or may not fall into the Boxing League itself. They may just be one-offs, but we would be paid a fee to act as a promoter, the producer and the event operator. So, a lot going on in boxing. We’re not taking our eye off the ball. We are squarely focused on UFC, WWE, as you can see from our earnings today. We’re growing, we’re picking up audience. We’re increasing engagement. We’re having tremendous success with new partners on the WWE front, and we are excited about the opportunities that will present themselves with the UFC renewal.

Operator: The next question comes from the line of Ben Swinburne with Morgan Stanley. Ben, your line is now open.

Ben Swinburne: I think for the year, you guys were able to do over 30% live event revenue growth for both UFC and WWE. And you talked about momentum continuing into ’25. Maybe you could just spend a minute talking about the outlook for that combined revenue stream? What kind of growth you can deliver this year and sort of the strategy to maximize that opportunity? And then I have a follow-up.

Mark Shapiro: I’ll let Andrew speak to the financial forecast. And then I’ll throw in some color. Thanks, Ben. One sec.

Andrew Schleimer: Yes. No, I don’t think we’re going to talk specifically about growth. But obviously, ’24 was a banner year under Pete Dropick’s leadership across the entirety of the portfolio as we did with the global partnership team under Grant Norris-Jones, we really saw the fruits of our efforts under one consistent message from Pete all the way down. So, kudos to him and his team on these terrific results. As we report live event revenue, as you know, it includes both our ticket revenue and our site fees, both of which were new contributors in 2024. When we look forward to 2025, absent, obviously, the shift in the Saudi PLE, which the $55 million of revenue, which we noted shift from ’25 to ’26, we still expect meaningful growth year-over-year on a like-for-like basis.

That’s driven not only by site fee growth. I think I articulated in my prepared remarks, a couple of major drivers, WrestleMania, followed by Summer Slam, a couple of UFC events domestically and internationally. And then, of course, our partnership with Tourism Western Australia bring events into Perth. Underneath that, obviously just convenient yield maximization, leveraging technology, being smart about scaling on the WWE side and squeezing even more out of the rock on the UFC side. So, we’re fairly bullish that there’s still room to grow here, meaningfully to grow on both aspects of live event revenue.

Mark Shapiro: Yes. And I’ll tell you, Ben, we’re seeing strength on both sides of the coin on the events, both live, the demand for premium live events remains very strong. And while we’re mindful, always mindful of the macroeconomic uncertainty, and we’re always keeping an eye on those trends, we’re really not seeing any signs of a slowdown. I mean, as Andrew spoke to, our ticket yield is strong. Our dynamic pricing is strong. We’ve got new tools, we’re exercising AI opportunities, and we’re monitoring, pacings and advanced sales very closely for any signs of a falloff, not seeing it. On the premium sales side, too, On Location is off to a roaring start with both WWE and UFC, and we’re bullish about where that goes. In terms of ratings, which is the other side of the coin on live events, and then I’ll flip it back to you.

On the Netflix side, WWE’s Raw is even if you take out the premier episode, which obviously got a lot of play at the Intuit Dome, we’re up 13% from our 2024 Q1 average on USA Network. So, we’re seeing great take-up on Netflix with Raw. And at the same time, you have to believe we’re getting some sampling, so we’re getting some new audience. And when I talk about that increase in ratings, keep in mind, that’s an apples-to-apples. I mean that’s based on views. Total viewed minutes divided by run time. So similar to Nielsen’s average audience delivery as to how they report across linear exhibitions. This is the most apples-to-apples way to compare. And finally, NXT has been real winner for us this year. We moved that over to CW. And I mean, just last night, which was our latest episode, CW was up 16% in total viewers versus just a week ago, and that ranks as their fifth highest telecast for the quarter in terms of total viewers and audience adults 18 to 49.

So, CW is seeing some great uplift from NXT, and we’re thrilled about where it is. I think in Ari’s opening comments, he talked about us being up 12% for the year for CW, and that would obviously be lifted by the fact that we were up 16% last night. So live events and viewership, really strong for our events. We’re taking nothing for granted. Lee Fitting, Paul Levesque, Craig Borsari on the UFC side, doing a great job of storytelling. We’re getting the right matches made at the UFC, and we’re drawing significant audience.

Ben Swinburne: Yes, that’s kind of where I want to go next, Mark. Just — and maybe the answer is it’s too early. But one of the things that was so interesting about the Netflix deal was just the distribution outside the U.S. of WWE Raw, but also the PLEs, I know it’s — again, it’s early, so maybe not enough data. But I don’t know if you were Nick, I don’t know if it’s on, but I’d be curious if you’re seeing a noticeable benefit to engagement and ancillary monetization. You talked about doing more internationally this year, which makes sense. But has that shift to Netflix outside the United States registered yet in terms of the stuff you guys look at that matters to your business?

Mark Shapiro: Yes. Look, it’s a little too early for that, as you said. But I would just tell you that Nick, Lawrence, Andrew and myself, obviously, Dana and Ari, we’re very focused on more international events. So, while that’s obviously an investment vis-a-vis our margin, we constantly have to balance that brand, that audience quote, that engagement, get into new territories, build the audience and then the dollars will flow. So, we’re really focused on that. I would tell you, as it relates to the PLEs, on Peacock, in particular, where our deal for the PLE’s with Peacock is up in March of 2026, and we expect to get into a conversation with them on renewal in the second half of this year.

Andrew Schleimer: I guess further to contextualize, and I did mention this in my prepared remarks, as we think about just the P&L, we will be shifting, on the UFC’s side, three events from Apex to international locations over the course of this year, to that point on fan base and continued investment. And the road to WrestleMania, which we’re knee deep in right now, will include 11 events across Western Europe, leading up to WrestleMania in April. So massive investment on our side to ensure that we continue to reach fans all over the globe.

Operator: The next question comes from the line of Stephen Laszczyk with Goldman Sachs. Stephen, your line is now open.

Stephen Laszczyk: Maybe first on sponsorship for Mark. I know you put out some longer-term goals out there for the sponsorship business. Maybe you could talk a little bit more about the opportunity as you see ahead of you over the next 12 months or so? You recently signed the Monster Energy deal. I think that was a record for you guys. How much opportunity is out there? Maybe to step up some larger sponsors this year or perhaps add new logos to the business over the next few quarters.

Mark Shapiro: Thanks, Stephen. Look, short answer on this one. I mean we’ve guided to $375 million on sponsorship this year, inclusive of digital, and we are on track to hit that number. Where we’re seeing it — I would tell you, it’s early. But I think that the team would agree, we’re optimistic and really encouraged that Grant Norris-Jones and his team — is that the second mention for Grant? Grant Norris-Jones and his team have had tremendous success. Already out of the gate selling three, all three leads. So, you saw our announcement earlier today about the Kansas City TKO Takeover that we’re doing in April, which we’re obviously really excited about and VeChain has signed on as the presenting sponsor. But he is out there with his team selling obviously UFC and a lot of renewals because they had a lot of traction and incumbent deals, as you know.

WWE in a big way because this is all fertile ground for Nick Khan and what he’s trying to accomplish here in selling different parts of the ring, the arena and really outdoor activations and retail. So, we see there’s huge opportunity there. And then PBR. So, the fact that we could — we’re not even closed on PBR yet. And the fact that we’ve already closed two or three deals across all three leagues is truly really encouraging for where we’re going. So, I’m not going to give any long-term guidance of where that $375 million goes, but let’s just say, when you look at some of the more established leads that have been around for a century, like the NFL, we’ve got ways to go. So a lot of upside, and we want to get more mainstream sponsors in and we want to close some unsold categories across all three of the leads.

Stephen Laszczyk: That’s helpful. And then since you mentioned the Kansas City Takeover, I was curious if I could ask a question just on the economics around that deal. It seems like there’s a site fee component. There’s a pretty big sponsorship component, as you mentioned, maybe some nice efficiencies from operating the events together. I guess how can we think about sizing those opportunities both this year. And then as we look out over the next couple of years, how many more opportunities do you think exists within the calendar as to the type of Takeovers between the three sports?

Andrew Schleimer: Look, Stephen, I think this is an indication of our strategy working, and we’re just getting started on these multi-events per city weekends. What I’ll say is that our partners in the Kansas Sports Commission, our counterparty to a meaningful incentive package on this deal. We’re thrilled about the relationship and are looking forward to doing more. But again, when we talk about the potential opportunity here, I think we initially articulated it on our premium side. These are fight nights and non-PLE, non-pay-per-view event. So, if you start thinking about the initial math, around the portfolio of ’24 PLE slash pay-per-view events and how big that could get by virtue of monetizing those, we’re now looking a layer deeper. So, we have, as you know, 200-plus events in the entirety of the portfolio, and we get excited by virtue of being able to monetize those that are not just premium.

Mark Shapiro: We’re going there, Stephen. Obviously, you’ve got NXT, which we haven’t started selling any site fees. You’ve got all these UFC Fight Nights. So, we’ll have years of multiple layers of opportunity here to sell for more of our events. Not to mention, keep in mind what Lawrence is doing on the UFC side and what Nick is doing on the WWE side, is really festivalizing these events. When you’re adding three events over a weekend and you have to weigh in and you’re bringing a concert, right? And you have a partnership — Nick architected last year with Michael Rubin and Fanatics is a WWE experience, if you will, that kind of fest, all of a sudden, for each city, it becomes real economic impact. It’s a week-long celebration, superstar appearances, fighter appearances.

And it’s something that advertisers are really attracted to because it resonates in a very visceral way with our audience and their consumers. So, we’re just getting started here, but the fact that Kansas City jumped on to this is already going to ignite a bunch of incoming calls from various DMAs as we proceed here.

Operator: The next question comes from the line of David Karnovsky with JPMorgan. David, your line is now open.

David JPMorgan: Mark, given your executive role at both Endeavor and TKO, I wanted to see if you could shed some light on buying of TKO shares by EDR that we’ve seen since late December? Should investors read that as confidence in the future of TKO, are there some other factors maybe driving some of that purchasing? Any help would be great.

Mark Shapiro: Yes. No, look, I would just say this is a TKO earnings call. And despite my role at Endeavor, we’re not going to comment on Endeavor related matters.

David JPMorgan: Fair enough. And then just for Andrew, on the incremental UFC events abroad, I understood your lower margin just given the production cost, but to clarify, should we view them as overall EBITDA accretive to an Apex event? And then for Mark, just more broadly, what’s kind of driving the decision to finally move more of those events out of Vegas?

Andrew Schleimer: Yes, I think that’s the right way to think about them on an absolute dollar basis. From a contribution basis vis-a-vis Apex look, as we think about where we should host these, it’s with a long-term view in mind. Apex events, obviously coming out of COVID, carries a lower cost structure and a higher margin profile, but we do this more holistically and are making investments in the long run.

Operator: Your next question comes from the line of Peter Supino with Wolfe Research. Peter, your line is now open.

Peter Supino: A question about your guidance and then one about growth in the U.S. On guidance, I wanted to ask about the implied incremental margins in the 2025 guide, it looked to be about 75%. And I don’t want to sound like a spoiled child, that’s a really good level. But given some of the onetime margin dilution in 2024, UFC 306 and the gap in your Raw revenue stream, some — and we were expecting even better incrementals in the 2025 guidance. I wonder if you could talk about whether there are any expense pressures or new strategies that are showing up in Q4 margins and also in the 2025 guidance? I’ll pause there.

Andrew Schleimer: I think the answer simply is no. But if you look at some of the things that I articulated, Peter, in the prepared remarks, pro forma for the Saudi shift, that’s an incremental 50 basis points to total company margin. And when you look at year-over-year, ’24 — excuse me, ’23 to ’24, margin accretion was roughly 300 basis points. Our guide implies 150 to 200 basis points. And then obviously, if you were to think about normalizing for Saudi, there’s a little bit of upside to that. So, we believe that’s fairly healthy. Clearly, the Saudi shift is a bit of a headwind from a margin perspective as are some of these conscious decisions to move events internationally vis-à-vis Apex. So, you’re not missing anything. There are no undue expense pressures. We actually believe with some of these Takeover and other efficiency type opportunities, we can drive additional margin over the course of the year.

Peter Supino: I just wanted to ask about Netflix and specifically your Live Event business in the U.S. is super successful and maybe pretty optimized. And so, I wonder with all the engagement growth in Netflix, how do you turn that into more revenue? And then how [indiscernible] sponsorship to engagement growth?

Mark Shapiro: Well, I think it’s — look, there was a note the other day. I was quite surprised by on the [indiscernible], Nathan’s inside of defense with a price target has us drastically lower than we’re currently trading and seemingly a misunderstanding about our KPIs. There isn’t a day that goes by here, that we are not, as an executive team, squarely and laser-focused on the KPIs that will move our business, to your point. You have these successful live events, how are you monetizing it across various platforms and business lines. And we approach our work that way every day. If you’re having big live events that are drawing the kind of viewership, we are right now with SmackDown on NBC and NXT on CW and what we’re doing for UFC and ESPN+ and our launch on Netflix, you’re having that kind of viewership success, well, then you should be doing better in your media rights deals.

And while I think that without talking to us, we have a lot of analysts that are jumping to conclusions on what we may or may not get in a renewal of UFC, there’s no doubt about it, we’re still strong, and we’re still premium content, and there’s going to be demand for the UFC and the WWE PLEs that follow that. So, it starts with that. Obviously, live events that are selling out, we’re raising our ticket prices. Our premium opportunities are growing with the best in the business, the best in the industry now driving that business, which is On Location. Consumer products very, very strong on the WWE side, and it lends itself to being strong because of the superstars and the fictional nature of what we do there. And then, of course, on the UFC side, bigger winners we have and the more brand names we build, that’s going to lend itself along with the UFC brand to success on the licensing side.

And when you add all that together, demand plus demand equals an increase in site fees and sponsorship. So that’s where we are. That’s where the team is. We don’t need to reinvent. We don’t need to get distracted. We don’t need to break away from the pure-play sports strategy that we have at TKO. We just need to stay front and center focused on driving those lines of business, while at the same time, extending our brand overseas. So, it’s a good story for us. It will be an even better story over the course of the next 18 months as we renew our media deals and we go into ’26 with three events in Saudi on the WWE side, which already will give us a massive head start when it comes to long-term investors looking for long-term growth.

Ari Emanuel: Operator, let’s take one last question, please.

Operator: Absolutely. We will now take our final question. The question will come from the line of Ryan Gravett with UBS. Ryan, Your line is now open.

Ryan Gravett: On WWE media rights, you called out timing of content deliveries in the quarter as having some impact. So just wondering if some of those timing-related headwinds should start to reverse and any update on the opportunity here for additional programming with Netflix? And then, Andrew, just any additional color on how we should think about growth in media rights revenues at UFC through the year as new Netflix markets get turned off?

Mark Shapiro: Andrew, handle that first part and then let me talk about the ancillary with Netflix.

Andrew Schleimer: Yes. So that’s purely timing related and that will sort of sell out over the course of the year or any quarter. Obviously, some of these deliveries are related to our deal with [A&E] and other distributors. So, nothing that is of concern or structurally problematic, just timing. As it relates to the second part of your question — what was the second question? There was Netflix.

Ryan Gravett: It’s how to think about…

Andrew Schleimer: You said UFC with Netflix. So, as it relates to Netflix and WWE, if you recall, we retained the income from international distributors that do not — that do have deals that do not term out on January 1. So as those continue to be our distributors internationally, we retain the income from those distribution partners. And as they roll into Netflix deal, they roll in at rates similar to our economics in that deal. So, over the course of the year, we anticipate the first year of a 10-year deal with the step-up that we see by the fifth year of that relationship, fairly smooth over the course of that year of the relationship. So, no real impact from who the distributor is because we’re economically indifferent in the first year.

Nick Khan: And just to answer the part about the appetite and Netflix for ancillary programming. This is Nick, by the way, Ryan, as Mark said a couple of minutes ago, all we’ve seen from that place is an appetite for more WWE. They’ve been phenomenal to deal with. They promoted us in the way that we hoped we would be promoted, even more so than we had hoped. And the appetite by Netflix to have additional ancillary programming, we announced a few weeks ago that we’re doing a WWE behind the scene show with Netflix, which will come out later this year, assume there’s more cooking in the pipeline.

Andrew Schleimer: And I’ll tell you, Ryan, all these new ideas and concepts just lead to new business. I mean we announced the TKO Takeover in Kansas City, which will take place in April again. Earlier today, we’ve already had an inbound call on our interest in allowing one of the platforms to produce a follow doc on our fighters, superstars and bull riders, over the course of the weekend. So, think of Danica Patrick back in the day doing a NASCAR race and then rushing to an Indy 500 race or vice versa. And following that, that’s the impetus here. And that’s just new business. And it helps us with storytelling. It helps us launch names, it helps us build stars, it helps us attract audience. So, we’re clearly — something we’re motivating and encouraging our teams to think outside the color lines when we look for new opportunities to grow.

Seth Zaslow: Thank you everyone. Thank you, everyone, for joining us on the call and for your interest in TKO. Operator, you can conclude the call.

Operator: That concludes today’s call. Thank you all for your participation, and you may now disconnect your lines.