Q4 2024 TKO Group Holdings Inc Earnings Call
And I'll be happy for you if you can be happy for me
Speaker Change: Investor Relations at <unk>. Please proceed good afternoon, and welcome to <unk> 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.
Speaker Change: A recording of this call will also be available via our website for at least 30 days.
Speaker Change: After prepared remarks from Ari Emanuel Tko's Executive Chair, and Chief Executive Officer, and Andrew Schleimer, Teekay <unk>, Chief Financial Officer will open the call for questions.
Speaker Change: Marc Shapiro, our president and Chief operating officer, and Andrew will be handling the Q&A.
Speaker Change: Purpose of this call is to provide you with information regarding our fourth quarter and full year 2020 for performance.
Speaker Change: I want to remind everyone that the information discussed will include forward looking statements and or projections that involve risks uncertainties and assumptions.
Speaker Change: Please see our filings with the Securities and Exchange Commission for further detail.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: <unk>.
Speaker Change: 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.
Ari Emanuel: I'll now turn the call over to Ari.
Ari Emanuel: Thanks Seth.
Ari Emanuel: The fourth quarter capped off a milestone year for TKO one that showcase the strength unique value and demand of our premium IP in.
Ari Emanuel: In our first full year as a public company, we delivered record financial performance.
Ari Emanuel: In 2020 for 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.
Ari Emanuel: We strengthened our media rights portfolio by securing partnerships that will undoubtedly expand our universal reach and engagement.
Ari Emanuel: For starters, moving raw, our premier WWE franchise to Netflix will put us in front of the streamers 300 million subscribers weekend and week out and serve to be transformative to our business our.
Ari Emanuel: Our January launch at the Intuit dome in Los Angeles was the spectacle and our Monday night episodes hits have consistently landed in Netflix is weekly top 10 across the U S and the globe.
Ari Emanuel: We have also successfully transitioned WWE Smackdown to USA network and NXT to the CW driving significant audience growth as a result.
Ari Emanuel: In particular, the CW is 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.
Ari Emanuel: Premier to date, NXT is up 12% compared to USA 2024 average.
Ari Emanuel: 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.
Ari Emanuel: <unk> delivered 10, all time highest grossing event records in 2024 with five of those now ranking among the biggest and UFC history.
Ari Emanuel: Similarly, WWE had its most successful year for live events and set revenue records at 10 premium live events.
Ari Emanuel: Within the fourth quarter specifically.
Speaker Change: UFC closed out the year with back to back record setting live events, we hosted our highest grossing north American finite 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 hold seven of the top 10 highest gross.
Ari Emanuel: Event Records and MSG history.
Speaker Change: At WWE, we set more than 40 individual market records for ticket sales and paid attendance in the quarter.
Speaker Change: Blood in Atlanta delivered the largest gross ticket sales for our U S Arena event in WWE history.
Speaker Change: Additionally, survivor series in Vancouver set the largest north American Arena gate in WWE history since topped by Roz blockbuster debut with Netflix at Intuit Dome and Saturday nights main event returned with a sold out crowd that set of WWE gate record for New York's Nassau Coliseum and reached more than 3 million U S House.
Speaker Change: Holds across NBC in Peacock.
Speaker Change: Throughout the year, we continued to convert demand into high margin revenue, particularly through site fees with approximately a third of UFC and Wwe's marquee live events attracting incentive packages.
Speaker Change: 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 Riyadh season.
Speaker Change: And that momentum has continued into 2025 with the recent announcement of our monster energy renewal Ufc's largest ever partnership.
Speaker Change: WWE also set an all time high in sponsorship revenue growing 20% year over year when looking at WWE <unk> 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 <unk>.
Speaker Change: Our of our integrated model the global popularity of UFC, and WWE and the increasing demand for premium live sports and entertainment.
Speaker Change: As we move into 2025, we remain focused on sustaining our progress in 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 fine.
Speaker Change: We expect to close our acquisitions of IMG on location and PBR in the first quarter, expanding our global sports portfolio.
Speaker Change: Make no mistake about it these industry leading businesses will also help power WWE UFC benefiting both our loyal fan bases and our shareholders. Our immediate focus after the close will be on a quick and seamless integration.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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 <unk>.
Speaker Change: With that I'll turn the call over to Andrew and then Mark will join us.
Andrew Schleimer: Good afternoon.
Mark: Today I'm going to review, our financial performance for the previous quarter and full year, and then discuss our outlook for 2025.
Mark: As already highlighted 2024 was a record year for UFC and WWE, both in terms of revenue and adjusted EBITDA.
Mark: We delivered strong operating performance and we expect positive momentum in our businesses to continue this year.
Mark: Last year, we generated revenue of $2 $8 4 billion and adjusted EBITDA of $1 $25 1 billion, both of which exceeded the revised guidance. We provided on our last earnings call.
Mark: Our adjusted EBITDA margin was 45%.
Mark: To assist with comparability, we 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 one through September 11th 2023.
Mark: Including Ww activity for January one through September 11th 2023.
Mark: Combined revenue was $2 69 billion combined adjusted EBITDA was $1.
Mark: Nine 2 billion and our combined adjusted EBITDA margin was 42%.
Mark: Inclusive of these amounts revenue increased 7%.
Mark: Adjusted EBITDA increased 15% and adjusted EBITDA margin increased approximately 300 basis points.
Mark: 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 well.
Mark: While we made significant progress on achieving revenue and cost synergies.
Mark: <unk> 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.
Mark: Moving to the fourth quarter.
Mark: Reported results included three months of activity for both UFC and WWE.
Mark: We generated revenue of $642 million adjusted.
Mark: Adjusted EBITDA was $238 million and our adjusted EBITDA margin was 37%.
Mark: Revenue increased 5% adjusted EBITDA increased 7% and adjusted EBITDA margin increased approximately 100 basis points compared to the prior year.
Mark: Our USA segment generated revenue of $344 million in the quarter, an increase of 22% or $61 million.
Mark: Adjusted EBITDA was $178 million, an increase of 25% or $35 million.
Mark: <unk> adjusted EBITDA margin was 52% an increase from 51% in the prior year period.
Mark: As expected revenue benefited from the timing of the events calendar.
Mark: UFC had 10 total events, including for a number of events compared to nine total events, including three number of events in the prior year period.
Mark: Media rights and content revenue increased 18% to $198 million.
Mark: The increase was primarily driven by the additional number of event.
Mark: As we've discussed in the past number of events carry a higher allocation of fixed media revenue as compared to fight nights.
Mark: The contractual escalation of media rights fees also contributed to the increase in media rights and content revenue.
Mark: Live events revenue increased 24% to $65 million.
Mark: Ticket sales reflected the benefit of the additional number of events as well as strong underlying trends in pricing and attendance for high profile events, such as UFC 309 at Madison Square Garden, which was the second highest grossing event and MSG history.
Mark: Site fees in the quarter were comparable to the prior year as both periods included a number of event held in Abu Dhabi as part of our multiyear partnership with the department of culture and tourism.
Mark: Sponsorship revenue increased 39% to $67 million.
Mark: The increase was driven by new partnerships and renewals as well as the favorable event mix.
Mark: Adjusted EBITDA reflected the increase in revenue, partially offset by an increase in expenses.
Mark: Direct operating expenses increased primarily due to higher production marketing athlete costs and direct cost of revenue due to the additional number to mint and the mix of fight nights.
Mark: In the quarter, we held one additional finite overseas and one less event at apex compared to the prior year period.
Mark: SG&A increased primarily due to higher cost of personnel as compared to the prior year period.
Mark: Our WWE segment generated revenue of $298 million in the quarter, a decrease of 10% or $33 million adjusted.
Mark: Adjusted EBITDA was $114 million, a decrease of 19% or $27 million.
Mark: Adjusted EBITDA margin was 38% down from 43% in the prior year period.
Mark: As expected the decrease in revenue reflected the short term domestic rights deal, we'd reached for raw, which had an unfavorable impact of approximately $50 million on both revenue and adjusted EBITDA as compared to Q4 2023.
Mark: As a reminder, this was purely timing related and.
Mark: In January our long term agreement with Netflix to distribute raw commenced as already noted this partnership is off to a fantastic start.
Mark: Media rights and content revenue decreased 26% to $156 million.
The decrease was primarily related to the short term deal for RA as well as a decrease in third party original programming due to the timing of delivery.
Mark: Live events revenue increased 13% to $93 million.
Mark: As with UFC, we continued to see strong underlying trends for WWE live events.
Mark: The increase was primarily related to an increase in ticket sales.
Mark: Results in both the current and prior year also include our site fee related to a premium live event in Saudi Arabia.
Mark: Sponsorship revenue increased 48% to $23 million due to new partnerships and renewals across multiple categories, including gaming and retail among others.
Mark: Of note our <unk> were highly successful survivor series gross its highest ever partnership income and bad blood was up nearly 100% versus the prior year PLE during the same timeframe.
Mark: 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.
Mark: 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 pay to endeavor, which commenced for WWE in March of 2024.
Now moving onto our capital structure.
Mark: In 2024, we generated $509 million of free cash flow, our free cash flow conversion of adjusted EBITDA was 41%.
Mark: In line with our guidance of in excess of 40%.
Mark: Free cash flow included $75 million of capital expenditures, approximately $31 million of which related to Wwe's, New headquarters, which is now completed.
Mark: 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.
Mark: 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.
Mark: As previously disclosed in November we refinanced our existing credit facility.
Mark: In connection with the refinancing we entered into a new seven year $275 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.
Mark: We ended the year with $2 78 billion in debt and $526 million in cash and cash equivalents.
Mark: 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.
Mark: 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.
Mark: 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.
Mark: We also announced that our board authorized a $75 million quarterly cash dividend pursuant to this holders of Teekay all class a common stock will receive their pro rata share of distributions earlier.
Mark: Earlier today, we issued a press release announcing that the inaugural dividend will be made on March 31, and the amount of 38 per share to shareholders of record as of the close of business on March 14th.
Mark: Now turning to our outlook.
Mark: As we've 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.
Mark: For full year 2025, we're targeting revenue of $2 93 billion to $3 <unk> billion and adjusted EBITDA of $1 35 billion to $1 39 billion.
Mark: There are four notable drivers of this outlook that are important to underscore.
Mark: 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.
Mark: Number two in early January we announced that the January 2026, Royal Rumble will be hosted in Riyadh, Saudi Arabia.
Mark: This marks the first time in the event's nearly 40 year history that it will be hosted outside of North America.
Mark: As a result, our guidance for 2025 includes one PLD in Saudi Arabia compared to two <unk> 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.
Mark: And approximately 50 basis points on a full year total company adjusted EBITDA margin.
Mark: For the avoidance of doubt this item is purely timing related as we expect to host three peel used in Saudi Arabia in 2026, including Royal Rumble.
Mark: 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.
Mark: We expect 2025 to benefit from the site visa connection with Wrestlemania in Las Vegas in April.
Mark: Summer Slam at Metlife Stadium in New Jersey in August and various UFC events in the Middle East and Asia Pacific regions.
Mark: 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.
Mark: 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 insight fees in 2025.
Mark: Number four the mix of events, particularly at USC.
Mark: Consistent with our goal of continuing to grow Ufc's fan base and engagement in 2025, we expect to hold fewer events at apex and Las Vegas while.
Mark: 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.
Mark: While these events are expected to result in increased revenue they have a lower margin profile as compared to apex events.
Mark: 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.
Mark: Moving to the acquisition of IMG on location and PBR.
Mark: As already highlighted the close of this transaction is quickly approaching upon.
Mark: Upon closing endeavors is expected to own approximately 61% of teekay out through its holdings of <unk> class a shares and TKO opco common units.
Mark: 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 <unk>.
Mark: That said the 2025 outlook. We've provided does not include any activity related to IMG on location or PBR.
Mark: Subsequent to the close of the deal we intend to issue recast financial statements, which will include results from the acquired businesses.
Mark: We expect the financials for the year 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.
Mark: Just on this timeline, 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.
Mark: We will 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 endeavour's control of <unk> as well as IMG on location and PBR.
Mark: As a result, we will report a full 12 months of activity for 2025, even though we will only own and control the businesses for a shorter period.
Mark: 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.
Mark: That 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.
Mark: 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.
Mark: At WWE, we expect live events and sponsorship revenue to continue to reflect the momentum we're seeing in the business.
Mark: 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.
Mark: This is purely timing related.
Mark: It results in a shift in the quarterly revenue recognition, but has no impact on the full year amount.
Mark: 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.
Mark: As we previously announced for the first time ever the road to Wrestlemania will include an 11 city tour across the UK and Europe over three weeks in March.
Mark: 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.
Mark: Excluding these approximately $300 million of nonrecurring amounts our targeted free cash flow conversion rate would be in excess of 60%.
Mark: 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.
Mark: 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.
Thanks, Andrew operator, we're ready to open the call for questions.
Mark: We will now begin the question and answer session. If you would like to ask a question you may queue up by pressing star followed by a one on your telephone keypad.
Mark: If for any reason you would like to remove yourself from the queue. You may do so by pressing star followed by H L.
Mark: As a reminder, if you are using a speaker phone. Please remember to pick up your handset before asking your question.
Mark: Ken to join the question queue, you may do so by pressing star followed by a one on your telephone keypad.
Speaker Change: The first question will come from the line of Brandon Ross with light shed partners Brandon. Your line is now open.
Brandon Ross: Thanks for taking the questions guys.
Brandon Ross: Figured I'd start with whats most meaningful to your stock, which is going to be the UFC domestic deals and.
Brandon Ross: I know you are 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.
Brandon Ross: Thanks, Brian and good to hear from you today.
Brandon Ross: I would just tell you that.
Brandon Ross: As you said we are currently in our exclusive negotiating window with Disney and ESPN. The window opened on January 15th.
Brandon Ross: Last 90 days.
Brandon Ross: When we look at the outlook for our renewal I'd remind you that the market for premium content. Despite.
Brandon Ross: ESPN shedding MLB in F. One.
Brandon Ross: It's hot it's quite strong the content our content in particular at <unk>.
Brandon Ross: Because not only do we own and control it but you are right. There is no off season our content.
Brandon Ross: UFC and WWE for that matter.
Brandon Ross: As urgent III 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.
Brandon Ross: When it comes to our overall deal one package two packages have packages for package NASCAR style or whatever it might be we're focused on doing what's best for the business in the long term so that means the balance between maximizing our reach and engagement and monetization.
Speaker Change: Great and this one might be a little other box, but with Trumpf and charge, there's clearly a lot of change and we've heard some speculation about a potential repeal of the Ali Act wanted to get your thoughts on that and to what extent your boxing plants would.
Be dependent on such a repeal.
Speaker Change: Look the Ali at Katz laws.
Speaker Change: We believe it is actually possible to improve the current system to facilitate more opportunities for boxers and to re grow the sport of boxing in America.
Speaker Change: That's where we're at we're not in their active inside pushing.
Speaker Change: Drafting legislation lobbying legislators.
Speaker Change: That's ultimately for somebody else, whether it stays or goes we think the opportunity for boxing us.
Speaker Change: Extraordinary for us in particular, we can talk about that if someone else.
Things that question, but it's a clear opportunity and we are.
Speaker Change: We are we are chasing it I would also tell you 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 helped their strategy.
Speaker Change: The transition from linear to streaming and just keeping linear strong and at the same time, how much how much it helped our brand.
Speaker Change: Bob Iger, Jimmy Pitaro phenomenal partners running great businesses, serving sports fans around the world, we like where we're at and 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.
Speaker Change: Here's your follow up on the boxing what are your plans and then I'll shut up.
Speaker Change: Tremendous I'm really glad that you asked.
Speaker Change: Okay.
Speaker Change: Look I would tell you that.
Speaker Change: Look.
Speaker Change: Primary of focus I don't want to get away from that is continuing to drive value to our core business in our core business, even with adding the endeavor assets of IMG on location in PBR make no mistake about it our core business as UFC and WWE and we're focused on the integration.
Speaker Change: <unk>.
Speaker Change: IMG on location in PBR, both as Standalone businesses, but also to help power and fuel our two battleships that are UFC and WWE.
Speaker Change: 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 is the right strategic place for us to be we have expert.
Speaker Change: And Nick Con 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.
Speaker Change: I would tell you that there's still strong interest in the sport around the globe and particularly in the U S. Now Tyson and J Paul on Netflix isn't.
Speaker Change: 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 rate, but that event in November 24 attracted $100 million worldwide viewers and $65 million worldwide concurrent streams with just about $40 million of those in the U S. So.
Speaker Change: There is an audience, we're boxing and there is there is a dearth of boxing on the national platform and there is a desire to add 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.
Speaker Change: What I would tell you.
Speaker Change: 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.
Speaker Change: Promoter.
Speaker Change: And responsible for all day to day operations of the venture whereby we would receive.
Speaker Change: The fee.
Speaker Change: Of $10 million plus.
Speaker Change: We're not putting any money and we're not burning capital and 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.
Speaker Change: But it would it would be.
Speaker Change: Dependent.
Speaker Change: So achieving certain milestones, including us exceeding board approved annual budgets over those five years. So we just sent a delegation.
Speaker Change: To London to meet with.
Speaker Change: The Saudi delegation led by Andrew Schleimer, our CFO and Nick kind of course, who runs the UFC and Lawrence <unk> excuse me at WWE, and Lawrence Epstein, who runs the UFC and they had.
Speaker Change: A full day meeting earlier this week and we're getting awfully close and when we have something official will come out, but I think I've given you at least a framework of what the deal would be its own league and we'd have.
Speaker Change: Consistent throughout the year I think on top of that you should know that as part of the partnership.
Speaker Change: We would be the promoter producer and event operator for large scale kind of super fights as I call them.
Speaker Change: That would err.
Speaker Change: Really probably two this year and two in 2025, those may or may not fall into the boxing League itself. There may just be one offs, but we wouldn't be paid a fee to act.
Speaker Change: As the promoted the producer and the advent operator, so a lot going on in boxing were not taken our eye off the ball. We are squarely focused on UFC and 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.
Speaker Change: About the opportunities that will present themselves with the UFC renewal.
Speaker Change: Well I'm glad I asked that follow up thank you.
Brandon Ross: You got it I think I'd TGF, there just because I like you, though that Brandon.
Some time for your questions.
Speaker Change: The next question comes from the line of Ben Swinburne with Morgan Stanley. Your line is now open.
Speaker Change: Thanks, Good afternoon, guys I think for the year you guys were able to do over 30% live event revenue growth for both USAA WWE and you talked about momentum continuing into 'twenty five.
Speaker Change: Maybe you could just spend a minute talking about the outlook for that combined revenue stream, what kind of growth that you can deliver this year.
Speaker Change: And sort of the strategy to maximize that opportunity and then I have a follow up thanks.
Andrew Schleimer: But andrew to speak.
Andrew Schleimer: To the.
Andrew Schleimer: Financial forecast and then I'll throw in some color. Thanks Ben.
Andrew Schleimer: Yes, I don't I don't think we're going to talk.
Speaker Change: Outgrowth, but obviously 24 was a banner year under <unk> leadership across the entirety of the portfolio as we did with a global partnerships team undergraduates John.
Speaker Change: Really saw the fruits of our efforts under one consistent message from all the way down so kudos to him.
Speaker Change: On these terrific results as we report live event revenue as you noted included.
Speaker Change: Our ticket revenue on our site fees, both of which were <unk>.
Speaker Change: <unk>.
Speaker Change: With 24, when we look forward to 2025 absent obviously the shift in the Saudi PLE, which the $55 million of revenue, which we noted shift.
Speaker Change: 5% to 26, we still expect meaningful growth.
Speaker Change: Year over year on a like for like basis, Thats, driven not only by the growth I think I articulated in my.
Prepared remarks, a couple of major drivers Wrestlemania followed by summer Slam couple of UFC event.
Speaker Change: Nationally and then of course, our partnership with Gordon in Western Australia Arena.
Underneath that is honestly just yield maximization energy technology being smart about scale.
Speaker Change: The WWE side.
Speaker Change: Even more out of the.
Speaker Change: <unk>.
Speaker Change: We are fairly bullish that theres still room to grow here meaningful growth on both aspects of live event revenue.
Speaker Change: Thank you Ben.
Speaker Change: Seeing strength on both sides of the coin on the events both live the demand for premium live events remains very strong.
Speaker Change: And while we are mindful always mindful of the macroeconomic uncertainty and we're always keeping an eye on those trends were really not seeing any signs of a slowdown as Andrew spoke to our ticket yield is strong our dynamic pricing is strong we've got new tools, where we're exercising AI opportunities and we're monitoring pacings in advance.
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 we're bullish about where that goes in terms of ratings, which is the other side of the coin on live events all I'll flip.
Speaker Change: Back to you.
Speaker Change: On the Netflix side.
Speaker Change: WWE raw is is even if you take out.
Speaker Change: <unk>.
Speaker Change: Premiere episode, which obviously got a lot of play at the Intuit dome.
Speaker Change: <unk> were up 13% from our 2020 for Q1 average on USA network. So we're seeing great take up on on Netflix with raw and at the same time you have to believe we are getting some sampling source again getting some new audience and when I talk about that increase in ratings keep in mind.
Speaker Change: That's an apples to apples I mean thats based on views total viewing minutes divided by runtime. So similar to Nielsen average audience delivery as to how they report across linear exhibition. This is the most apples to apples way to compare and finally NXT is better.
Speaker Change: A real winner for us this year.
Speaker Change: Move that over to CW and I mean, just just last night.
Speaker Change: Yeah.
Speaker Change: Which was our latest episode CW was up 16% and total viewers versus just a week ago and that ranks fifth highest telecast for the quarter in terms of total viewers and audience. Adults 18 to 49, so CW seeing seeing some great uplift from NXT and were.
Speaker Change: We're thrilled about where that is I think in our opening comments you talked about us being up 12%.
Speaker Change: For the year for GW 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 were taking nothing for granted Lee fitting all of Vac, Craig we're sorry on the UFC side doing a great job of storytelling.
Speaker Change: Matches made it the UFC and we're drawing a significant audience.
Speaker Change: Yes, that's kind of where I wanted to go next Mark just maybe the answer is it's too early but but one of the things that was so interesting about the Netflix deal is just the distribution outside the U S of WWE raw, but also the PLD. It's I know it's again, it's early so maybe not enough data, but I know if you are near kind of the Exxon, but I'm curious if youre seeing.
Speaker Change: 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.
Speaker Change: Yes look it's a little too early for that as you said, but I would just tell you that the niche Lawrence Andrew or myself, obviously, Dan and Ari, we're very focused on more international events. So while that's obviously an investment vis vis our margin.
Speaker Change: We constantly have to balance that brand and audience growth that engagement and get into new territories build the audience and then the dollars will flow. So we're.
Speaker Change: We're really focused on that I would tell you as it relates to our <unk>.
Speaker Change: On Peacock in particular.
Speaker Change: We're our deal for the <unk> with Peacock is up in March of 2026.
Speaker Change: And we expect to get into a conversation with them on renewal in the second half of this year I guess further contest.
Speaker Change: Realized and I did mention this in my prepared remarks, as we think about just the P&L, we will be shifting on the USPI side three events from apex two international locations over the course of this year to that point on fan base and continued investment in the road to Wrestlemania, which we're knee deep in right now.
Speaker Change: Crude 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.
Speaker Change: Alright. Thanks.
Speaker Change: Hi, guys.
Thank you thank you Frank.
Speaker Change: Thank you for your question. Your next question comes from the line of Stephen <unk> with Goldman Sachs. Stephen Your line is now open.
Stephen: Hey, guys. Thanks for taking the question maybe first on sponsorship for Mark I know you put out some longer term goals out there for the sponsorship business.
Speaker Change: If you could talk a little bit more about the opportunity as you see ahead of you over the next 12 months or so.
Speaker Change: Recently signed that the Monster energy deal I think it 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.
Speaker Change: To the business over the next few quarters. Thank you.
Thanks Steven.
Speaker Change: 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.
Speaker Change: We hit that number where we are seeing.
Speaker Change: It's early but I think that that.
Speaker Change: The team would agree.
Speaker Change: We're optimistic and really encouraged that grant Doris Jones and his team the second metric.
Speaker Change: Two messages from today's granular as Jones and his team have had tremendous success.
Speaker Change: Already out of the gate selling three all three leaves. So you saw our announcement earlier today about the Kansas City.
Speaker Change: Oh takeover that we're doing in April, which we're obviously really excited about NV chain 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.
Speaker Change: Nick on and what he is trying to accomplish here and selling different parts of the ring in the arena and really outdoor activations and retail. So we see there is 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.
Speaker Change: Three leagues.
Speaker Change: Is truly really encouraging for where we're going so I'm not going to give any long term guidance of where that 375 goes.
But let's just say when you look at some of the more established lease that had been around for a century like the NFL.
Speaker Change: Got ways to go so a lot of upside we want to get more mainstream sponsors in and we want to we want to close.
Speaker Change: Some unsold categories across all three of beliefs.
Speaker Change: That's helpful. And then since you mentioned that the Kansas They take over all of us.
Speaker Change: Curious if I could ask a question just on the economics around that deal. It seems like there is a slight fee components. There is a pretty big sponsorship component as you mentioned, maybe some nice efficiencies from operating events together I guess, how can we think about sizing those opportunities.
Speaker Change: Both this year and then as you look out over the next couple of years, how many more opportunities do you think exists within the calendar.
Speaker Change: Or do you just have to take over.
Speaker Change: Between the three sports thank you.
Speaker Change: Look Steven I think this is an indication of our strategy working and we're just getting started on these multi event per city weekends, what I'll say is that our partners in the Kansas Esports Commission.
Speaker Change: Our counterparty to a meaningful incentive incentive package on this deal we're thrilled about the relationship and are looking forward to do anymore, but again, when we talk about the potential opportunity here I think we initially articulated on our premium side. These are finite.
Speaker Change: And non <unk> non pay per view event. So you can start thinking about initial math around the portfolio of 24, PLE slash pay per view events and how big that could get.
Speaker Change: By virtue of monetizing those.
Speaker Change: We're now looking a layer deeper so we have as you know 200 plus events in the entirety of the portfolio, we get excited by virtue of being able to monetize those that are not just the premium.
Speaker Change: We're going there, Steve and obviously you've got.
Speaker Change: NXT, which we haven't started selling any any side because you've got all these UFC fight nights. So we will have years of multi layer of opportunity here to.
Speaker Change: To sell for more of our event not to mention keep in mind, what Lawrence is doing on the UFC side and with Nic is doing on the Ww side is really festival Isaac.
Speaker Change: These events when youre, adding three events over a weekend and you have to wait and youre, bringing a concert right.
Speaker Change: We have a partnership Nick Architected last year with Michael Rubin and fanatics is a WWE experience. If you will that kind of effect all of a sudden for each city. It becomes real economic impact, it's a week long celebration superstar appearances fighter appearance.
Andy: This is Andy.
Speaker Change: It's something that advertisers.
Andy: Are really attracted to because.
Andy: It resonates in a very visceral way with our audience and their consumers. So.
Andy: We're just we're just getting started here, but the fact that Kansas city jumped onto this is already going to ignite.
Andy: A bunch of incoming calls from various DMA is as we as we proceed here.
Speaker Change: That's great. Thank you both.
Andy: Yeah.
Speaker Change: Thank you for your question. The next question comes from the line of David Karnofsky with J P. Morgan David Your line is now open.
Speaker Change: Thank you Mark given your executive role at both <unk> and <unk> I wanted to see if you could shed some light on.
Speaker Change: Buying a ticket shares by Edr that we've seen since late December should investors read that confidence in the future of Tico are there. Some other factors may be driving some of that purchasing any help would be great.
Speaker Change: Yeah.
Speaker Change: Yeah, No look I would just say this is a TKO earnings call. Despite my role at endeavor, we're not going to comment on endeavour related matters.
Speaker Change: Alright, and then just for Andrew on the incremental Youll see Youll see events abroad understood their lower margin just given the production costs, but to clarify.
Speaker Change: Should we view them as overall EBITDA accretive to an apex of it and then for Mark just more broadly whats kind of driving the decision to finally move more of those events out of Vegas.
Speaker Change: I think thats, the right way to think about them on an absolute dollar basis.
Speaker Change: On a contribution basis.
Speaker Change: Apex.
Speaker Change:
Speaker Change: Look as we think about where we should host these.
Speaker Change: A long term view in mind FX event, obviously coming out of Covid carry a lower cost structure and a higher margin profile, but we view this more holistically.
Speaker Change: Investments in the long run.
Speaker Change: Alright, thank you.
Speaker Change: Thanks, David.
Speaker Change: Thank you for your question. Your next question comes from the line of Peter Zaffino, That's Wolfe Research Peter Your line is now open.
Speaker Change: Hello, 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 looks 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 <unk>.
Speaker Change: Onetime margin dilution in 2020 for UFC three six in the gap.
Speaker Change: <unk> revenue stream.
Speaker Change: Some and we were expecting even better incrementals into 2025 guidance I Wonder if you could talk about whether there any.
Speaker Change: Hence pressures or new strategies that are showing up in.
Speaker Change: Q4 margins and also in 2025 guidance.
Speaker Change: I'll pause there.
Speaker Change: I think that's the answer.
Please note.
Speaker Change: But if you look at some of the things that I articulated Peter in the prepared remarks pro forma for the salary shift that's an incremental 50 basis points to total company margin.
Speaker Change: You look at year over year.
Speaker Change: <unk> 'twenty four 'twenty three to 'twenty four margin accretion with roughly 300 basis points. Our guide implies 150 to 200 basis point.
Speaker Change: 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 shifted a bit of a headwind from a margin perspective.
Speaker Change: Some of these the conscious decision to move events internationally.
Speaker Change: APAC, so you're not missing anything there no undue expense pressures, we actually believe.
Some of these.
Speaker Change: Takeover and other efficiency type opportunities.
Speaker Change: Drive additional margin over the course.
Speaker Change: And I think that's helpful. Thanks, and somebody else.
Scott: No go ahead Scott.
Scott: Thanks Mark.
Scott: I just wanted to ask about Netflix and specifically.
Speaker Change: 11, Youre live event business in the U S is because.
Speaker Change: Super successful and maybe pretty optimized and so I wonder with all the engagement growth to Netflix how do you turn that into more revenue and then how geared as sponsorships and engagement growth.
Speaker Change: Well I think it will look.
Speaker Change: There was a note the other day.
Speaker Change: Quite surprised by.
Speaker Change: Market Nathan's inside the fence.
Speaker Change: With the.
Speaker Change: Our price target that has 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.
Speaker Change: Squarely and laser focused on the Kpis that will move our business to your point you have the successful live event how are you monetizing it.
Speaker Change: Various platforms and business lines, and we approach our work that way every day.
Speaker Change: Youre, having big live events that are drawing the kind of viewership. We are right now with Smackdown on NBC and <unk> and NXT on CW.
Speaker Change: And what we're doing for UFC on ESPN, plus and our launch on Netflix you're having that kind of success. Well then you should be doing better than your media rights deals.
Speaker Change: 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 UFC theres no doubt about it were still strong and we are still premium content and there's going to be demand for the UFC and the WWE <unk> that follow that so it starts with that obviously.
Live events that are selling out.
Speaker Change: Raising our ticket prices are premium opportunities are growing with the best in the business. The best in the industry now driving that business, which is.
Speaker Change: On location.
Speaker Change: Consumer products very very strong on the WWE side and it lends itself to being strong because of the superstars in the fictional nature of what we do there and then of course on <unk>.
Speaker Change: C side bigger winters, we have and the more brand names, we build that's going to lend itself along with UFC brand to success on the licensing side and when you add all of that together demand plus demand equals an increase in site fees and sponsorship. So that's that's where we are that's where the team is we don't need to reinvent.
Speaker Change: We don't need to get distracted, we don't need to break away from the pure play sports.
Speaker Change: Strategy that we have at TKL, we just need to stay front and center focused on driving those lines of business, while at the same time, extending our brand overseas.
Speaker Change: It's a good story for us.
Speaker Change: Even better story over the course of the next 18 months as we renew our media deals.
Speaker Change: And we go into 2006 with three events in Saudi on the Ww side, which already will give us a massive head start when it comes to long term investors looking for long term growth.
Speaker Change: Thanks, so much.
Speaker Change: Yeah.
Speaker Change: Operator lets take one last question please.
Speaker Change: Absolutely we will now take our final question. The question will come from the line of Ryan Grapple with UBS, Brian. Your line is now open.
Speaker Change: Okay. Thanks, guys.
Speaker Change: Amit WWE media rights I think you called out timing.
Speaker Change: Content deliveries in the quarter.
Speaker Change: As having some impact so just wondering if some of those timing related headwinds should start to reverse.
Speaker Change: Any update on the opportunity here for additional programming with Netflix.
Speaker Change: And then Andrew just any additional color on how we should think about growth in media rights revenues UFC through the year as new Netflix markets get turned off thanks.
Speaker Change: So Andrew handle that in the first part and then let Nick talk about the ancillary with Netflix so thats purely timing related and that will sort itself out over the course of a year.
Or any quarter.
Speaker Change: Obviously.
Speaker Change: Some of these deliveries are related to our deal with A&D and other.
Speaker Change: Other distributors. So nothing that is of concern are structurally.
Speaker Change: Problematic just timing.
Speaker Change: As it relates to the second part of your question.
Speaker Change: What was the second question.
Speaker Change: Net but there was definitely probably to think about.
Speaker Change: Although maybe I don't think about it as you said.
Speaker Change: You said UFC with Netflix so as it relates to Netflix and WWE. If you recall, we retained income from international distributors.
Speaker Change: That do not.
Speaker Change: Deals that do not turn out on January the FERC so as those.
<unk> distributors internationally, we became the income from.
Speaker Change: Those distribution partners and as they roll into that deal a rolling.
Speaker Change: <unk>.
Speaker Change: 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 can see by the fifth year that relationship fairly smooth over the course of that first year of the relationship so no real impact from who the distributor is.
Speaker Change: Because of the economically indifferent in the first year.
Speaker Change: And just to answer the part about the appetite 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 places an appetite for reward WWE.
Speaker Change: They've been phenomenal to deal with promoted us in the way that we hope would be promoted even more so than we had hoped and the appetite.
Speaker Change: By Netflix to have additional ancillary programming, we announced a few weeks ago, we're doing a WWE behind the scenes show with Netflix, which will come out later this year assume theres more cooking and then the pipeline.
Speaker Change: Hey, Ryan all these new ideas and concepts just lead to new business I mean, we announced the Teekay will take over and Kansas City, which will take place in April again.
Speaker Change: Earlier today, we have already had an inbound call on our interest in allowing.
Speaker Change: One of the platforms to produce.
Speaker Change: A follow Doc on our fighters superstars in 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 8500 race or vice versa and following that.
Speaker Change: That's the impetus here and that's just 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 we're clearly.
Speaker Change: Something we're motivating and encouraging our teams to <unk>.
Speaker Change: Outside.
Speaker Change: Outside the.
Speaker Change: The color lines when we.
Speaker Change: When we look for new opportunities for growth.
Speaker Change: Well thank you.
Speaker Change: Thank you everyone for joining us on the call and for your interest in TKL. Operator, you can conclude the call.
Speaker Change: That concludes today's call. Thank you all for your participation and you may now disconnect your lines.