TKO Group Holdings, Inc. ((TKO)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call from TKO Group Holdings, Inc. revealed a strong financial performance with record-breaking achievements in media rights, live events, and sponsorship revenues. Despite these successes, the company faced challenges with WWE revenue declines and margin impacts due to event timing and location changes.
Record Financial Performance
TKO Group Holdings delivered a record financial performance in 2024, reporting a revenue of $2.804 billion and an adjusted EBITDA of $1.251 billion, surpassing their revised guidance. The company achieved an impressive adjusted EBITDA margin of 45%, showcasing its robust financial health.
Successful Integration of UFC and WWE
The integration of UFC and WWE was a significant success, exceeding the guided net savings of $100 million. This strategic move has driven efficiency across the company, contributing to its overall strong performance.
Media Rights Expansion
A transformative partnership was secured by moving WWE Raw to Netflix, providing exposure to 300 million subscribers. This strategic move is expected to drive significant audience growth, particularly for NXT on the CW network.
Record-Breaking Live Events
Both UFC and WWE set multiple all-time highs for ticket sales, attendance, and gate revenues. UFC alone delivered 10 all-time highest grossing event records in 2024, underscoring the popularity and success of their live events.
Sponsorship Revenue Growth
Sponsorship revenues saw substantial growth, with UFC sponsorship revenue increasing by 28%, marking the seventh consecutive record-breaking year. WWE also set an all-time high in sponsorship revenue, growing 20% year-over-year.
Strategic Acquisitions
TKO plans to close acquisitions of IMG, On Location, and PBR in Q1 2025, a move aimed at expanding its global sports portfolio and strengthening its market position.
WWE Revenue Decline
The WWE segment experienced a 10% decrease in revenue due to the short-term impact of domestic rights deals, resulting in a $50 million revenue shortfall compared to Q4 2023.
Saudi PLE Shift
A timing shift of a Saudi PLE from 2025 to 2026 is projected to have an unfavorable impact of approximately $55 million on total company revenue for 2025.
Margin Impact from Event Mix
The shift of UFC events from Apex to international locations is expected to result in lower margins due to higher production costs, impacting the overall profitability.
Forward-Looking Guidance
Looking ahead, TKO is targeting a revenue range of $2.93 billion to $3.0 billion and an adjusted EBITDA of $1.35 billion to $1.39 billion for 2025. The company plans to reduce events at the UFC Apex to expand internationally and is preparing for the acquisitions of IMG, On Location, and PBR to broaden its global sports portfolio.
In summary, TKO Group Holdings, Inc. demonstrated a strong financial performance with record-breaking achievements across various segments. Despite challenges such as WWE revenue declines and margin impacts, the company remains optimistic about its future, with strategic plans and acquisitions set to drive further growth.