Q1 2025 Liberty Media Corp Earnings Call
Thanks for watching!
END
Speaker Change: Welcome to Liberty Media Corporations 2025 Q1 earnings call. During the presentation, all participants will be in a listen only mode.
Afterwards, we will conduct a question and answer session.
At that time, if you have a question, please press star 1 on your telephone. As a reminder, this conference will be recorded May 7th.
Speaker Change: I would now like to turn the call over to Shane Kleinstein, Senior Vice President Investor Relations. Please go ahead.
Speaker Change: Thank you and good morning. Before we begin we'd like to remind everyone that this call includes certain forward-looking statements within the of the private security's litigation reform act of 1995.
Speaker Change: Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the most recent forms, 10K and 10Q, filed by Liberty Media with the SEC.
Speaker Change: These forward-looking statements speak only as of the date of this call in Liberty Media expressly described any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Liberty Media's expectations with regard there to or any change in events, conditions or circumstances on which any such statement is based.
Speaker Change: On today's call, we will discuss the non-GAAP financial measures for Liberty Media, including Adjustment Avoid that. The required definition and reconciliation for Liberty Media, schedule one, can be found at the beginning at the end of the earnings press release issue today, which is available on Liberty Media's website.
Speaker Change: Speaking on the call today, we have Liberty's President and CEO , Derek Chang, Liberty's Chief Accounting and Principal Financial Officer Brian Wemling, Formula One's President and CEO , Stafford Dominic Ali, and other members of Liberty Management will be available for Q&A. I'd like to turn the call over to Derek.
Derek Chang: Great. Thank you, Shane. Good morning, everyone. It has been a great start to the year of Liberty. Broadly, the priorities we have outlined for 2025 are progressing well.
Derek Chang: Namely, number one, we are working towards the close of the DORNA acquisition to continuing our path towards structural simplification, and three, we continue to drive momentum at Formula One, starting first with the DORNA acquisition.
Derek Chang: We are progressing with the Phase 2 regulatory process and working constructively with the European Commission. We hope to receive approval by the long-stop date of June 30, 2025.
Speaker Change: MotoGP kicked off 2025 with its first overseas launch event in Bangkok. The event generated massive buzz bringing together all 11 teams to showcase MotoGP as a thrilling sport and premium entertainment brand.
MotoGP will host a 22 race calendar 2025.
Speaker Change: Compared to 20 races last year which was impacted by race cancellations necessitating two replacement races scheduled mid-season. The season is off to a great start with incredible on-track action and growth in attendance across the first five races completed to date.
Speaker Change: The Argentina Grand Prix set a new attendance record for the track with over 200,000 spectators.
Speaker Change: Thailand's attendance was up 15% and CODA hosted its largest crowd since 2018 in a red net saws highest attendance since 2015 with 24% growth over 2023.
Speaker Change: Coupling out several commercial agreements to start the season including Pirelli as a new tire supplier starting in 2027 and the extensions of the Barcelona, French, and Valenti of GPs through 2031.
Speaker Change: Our second priority is continuing to progress our structural simplification, including the plans put off of Liberty Live.
Speaker Change: Our third priority is continuing to drive momentum at Formula One. The confidence of excellent racing and commercial momentum is benefiting engagement and financial results in 2025. There are several areas currently in focus worth highlighting.
Speaker Change: We are seeing continued momentum in sponsorship and licensing to start the year.
Speaker Change: In excellent showcase with the LEGO partnership last weekend in Miami, where all 10 teams rode in fully drivable LEGO F1 cars to the driver's parade.
Speaker Change: The project took over a year to come to life and required 400,000 legal bricks per car. It was an amazing collaboration that captivated our fans and the internet and our drivers loved it.
Speaker Change: Looking ahead, fully-responsorship pipeline forward has allowed our team to focus on 2026 and beyond and emphasize secure and blue-ship means aligned with the F1 brand. The appeal and breadth of the F1 brand are uniquely resonating with sponsors across B&B and consumer brands alike.
Speaker Change: Second, we are focusing on improving LVGP standalone economics and maximizing the overall benefit to the F1 ecosystem.
Speaker Change: Tickets went on sale on early April , and volumes are trending ahead of this time last year.
Speaker Change: Lumber initial ticket prices are driving momentum which we expect to drive better
Speaker Change: With the first two years having demonstrated clear benefits to the wider Vegas ecosystem, we are engaged in encouraging discussions with key local stakeholders to ensure their support and best position in the event for future growth.
Speaker Change: Finally, our current US media rights agreement concludes at the end of 2025.
Speaker Change: And we are an active and productive discussion for a new deal. F1 is a strong product for broadcasters with solid growth in the U.S including the season and an attractive demographic with one-third of viewers under age 35, females representing 42% of the fans.
Speaker Change: We remain focused on finding the right partner to continue to innovate on Broadcast All Springs and sustain on momentum in the U.S.
Speaker Change: While early in the year performance today is strong, the contractual nature of that Formula One cash flow provides high visibility into our business performance for the next several years.
Speaker Change: and will be especially important in this macro economic climate. As of March 31, Formula 1 had $14.2 billion of future revenue secured under contract.
Speaker Change: Advanced ticket sales for our promoters and hospitality tickets for the remainder of the season remains strong. We continue to actively monitor changes in consumer sentiment, though historically Formula One's business model has proven resilient in times of economic uncertainty.
Speaker Change: We are encouraged by the strength of the business and look forward to completing the rest of an exciting season.
Speaker Change: Now, I'll turn it over to Brian from Warren, Liberty's Financial Results. Thanks, Derek, and good morning, everyone. A quarter-end Formula One Group had attributed cash and liquid investments of $2.8 billion, which includes $1.5 billion of cash at F1 and $69 million of cash at Quint.
Speaker Change: Total formula one group attributed principal amount of debt was 2.9 billion a quarter end, which includes 2.4 billion of debt at F1, leaving 526 million at the corporate level.
Speaker Change: F-1's 500 million dollar revolvers on drawn and their leverage at 331 was 1.2 times.
Speaker Change: As a reminder, all MotoGP transaction-related financing is in place and deal contingent.
Speaker Change: Turning to the Formula One business, I'll make brief comments on the quarterly results, though as we all know, the business is best analyzed on an annual basis given variability in the year over your race calendar and timing of events.
Speaker Change: Note that every quarter in 2025 will have incomparable race count and mix which will impact year-over-year comparisons and quarterly results throughout the year.
Speaker Change: Most of the variability in year-over-year results is due to the two races held in Q-1, 2025 compared to three races in Q-1, 2024. Race promotion revenue decreased due to the mix of races with Australia and China occurring in the current period, compared to Bahrain, Saudi Arabia and Australia in the prior year.
Speaker Change: Media rights and sponsorship decline is only 224's projected season-based revenue was recognized compared to 324's last year.
Speaker Change: Sponsorship is also impacted by the calendar shift as the Saudi Arabia and Bahrain races both have race-specific local title sponsorships and recognition of that race-specific revenue shifted with the timing of those races.
Speaker Change: However, the decline in sponsorship revenue was largely offset by strong underlying growth from new and renewed deals impacting 2025.
Speaker Change: Media rights revenues benefiting from contractual increases in rights fees and continued growth in F1 TV, benefiting from the launch of the new premium subscriptions here.
Speaker Change: other revenue decline during the first quarter as a result of one less paddock club event and a mix of races held.
Speaker Change: Adjusted orbit had declined alongside revenue during the quarter driven by the counterbearers.
Speaker Change: Other costs of F-1 revenue increase due to higher-fray costs with longer rubs blown and increased commissions and partner servicing costs, servicing the overall primary F-1 revenue growth as well as higher costs for Grand Prix Plaza due to more activity compared to Q-1 2024.
Speaker Change: On an employer basis, we expect other cost of F1 revenue to be consistent with prior years as a percentage of total revenue.
Speaker Change: SGNA increased in the first quarter due to marketing costs associated with the season launch event at the O2 and should be viewed as a percentage of total revenue for the
Speaker Change: Team Payments decreased in the first quarter due to the lower pro-rata recognition with one less race held partially offset by the expectation of higher full-year team payments.
Speaker Change: As a reminder, a reminder that Team Payments is a percent of pre-team-adjusted Waibido was 61.5 in 2024, and we expect that percentage to continue to come down as we complete the term of the Carrot Concord Agreement at the end of 2025.
Speaker Change: In connection with all 10 teams signing the 2026 Concord Commercial Agreement, Formula One paid a total of 50 million to the teams in the first quarter.
Speaker Change: This cost is excluded from adjusted to wipe it in, presented separately from team payments. Although revenue and adjusted to wipe it were lower a year over a year due to the calendar variance, we are seeing strong. A strong financial start to the year and are tracking well against our internal plan.
Speaker Change: Grant Preplata in Las Vegas officially opened its new year round activations on May 2nd. Prevenue from these activations will be recognized at the F1 op-code level that we expect results will have a modest impact in 2025 as we scale that business.
Speaker Change: The vast majority of the CAPEX report to build-up Grand Prix Plaza activations was incurred in the first quarter. Total F1-F CAPEX was approximately 33 million year today, including slightly less than 20 million incurred related to GPP.
Speaker Change: Looking briefly at corporate and other results in the first quarter, revenue was 53 million, which includes quip results and approximately 6 million rental income related to the Las Vegas Grand Prix Plaza. Corporate and other adjusted over-loss was 12 million and includes Grand Prix Plaza rental income, quip results, and corporate expenses.
Speaker Change: Reminder that Quince Business is seasonal with the largest and most profitable events taking place in Q2 and Q4. Q1 has modest event activity while still incurring ordinary course operating expenses.
Speaker Change: Quickly turning to the Liberty Live Group, there is a turbidity cast of 314 million and 400 million of undrawn marginal capacity relating to our live nation marginal.
Speaker Change: As of May 6, the value of our live nation's stock held at Liberty Live Group was $9.3 billion. We have $1.5 billion in principle amount of debt against these holdings. Liberty and F1 are in compliance with their debt covenants at quarter-ent. With that, I'll turn the call over to Stefano to discuss Formula One.
Stefano Domenicali: Thanks Brian , Formula One is off to a great start in 2025. We are six races into the season and continue to see exciting on track action.
Stefano Domenicali: The winds have been spread across teams and the race is tighter than expected. While early in the season we expect the action to continue. The strong contractor Formas has fueled fan engagement.
Stefano Domenicali: Antendices is up over last year with sell-out crowds and nearly all races to date. We've reached a new record crowd for the Australian robbery with an outstanding 465,000 weekend attendees.
Stefano Domenicali: The man's, for the balance of the year, is strong as well. Mexico sold out in a matter of hours for the 10th years in a row, and Montreal again experienced strong demand with the majority of the 2020 forecast returning to 25.
Stefano Domenicali: The man for hospitality products holds for a main high. Season to date, we sold over 12,000 tickets at Padao Tower Power Club and we have seen strong advances across the remainder of the season.
Stefano Domenicali: We remain focused on opportunities to increase capacity and are working in an alternative and innovative hospitality products where the men, our strips, supply.
Stefano Domenicali: Turning to leadership statistics across our top 50 markets like the viewership grew for the first five races of the season.
Stefano Domenicali: We add over 60 million cumulative linear TV viewers for the opening, Grand Prix Weekend in Australia. The US in particular has seen strong growth, with ESPN viewership up 45% across the first
Stefano Domenicali: The Australian Grand Prix was the most viewed edition of the race ever for the US audience.
Stefano Domenicali: Other markets with notable linear viewership growth include Brazil, France and Australia.
Stefano Domenicali: Highlights viewership on F1 YouTube channel has increased by 31% compared to last year. Infasized with the significance and growth in our digital channels has fans, finds new ways to engage with our footage on and off the track.
Stefano Domenicali: Social Media followers have now reached 100 million, growing 30% year-over-year.
Stefano Domenicali: The first quarter growth was particularly driven by Instagram, TikTok and YouTube.
Stefano Domenicali: Looking more broadly, Nilsen released new fan data in March, showing the continuous search in F1 fandom. With our total fan base as of year end over 826 million, adding nearly 90 million new fans in 2024.
Stefano Domenicali: These engagement figures have not just numbers. They represent the growing global appeal and genuine engagement with our sport and validate our initiatives to enhance F1 for our fans.
Stefano Domenicali: The strong age with figures are part of a broader picture of commercial success. When I'm pleased to report, we continue to have strong momentum.
Stefano Domenicali: On Race Promotion, we are working toward finalizing our 26 calendar.
Stefano Domenicali: We were excited to announce renewal of our Mexico race through 2028 and Miami through 2041. The longest count of currently secured and a statement to our success in the U.S. market.
Stefano Domenicali: and we are evaluating values opportunities for the future. The Netherlands will host their final race in 2026 and SPA will race in alternative years from 2027, leaving an opening on the calendar in 2028.
Stefano Domenicali: Tickets for Las Vegas went on sale April 9th, featuring new ticket prices and offerings.
Stefano Domenicali: Ticket now starts at $50 for a single-day general admission and $400 for three-day general admission in Flamingo Zone and we've communicated to fans that the prize will not be going down from their initial own sale, helping to drive urgency and momentum in sale.
Stefano Domenicali: To date, we are very pleased that our speed velocity in Vegas is meaningful outpacing last year.
Stefano Domenicali: Our Media-Write business continues to demonstrate the growing competition for McKee's port rights. F1TV Subscriber growth continues to be robust. We total subscriber up 4% year over year, led by the US market up 20%.
Stefano Domenicali: The launch of our new F1 TV Premium, tier has outperform expectation, especially in Kimarket like the U.S.
Stefano Domenicali: We are in active and positive discussion for our U.S. media rights with multiple partners and look forward to sharing updates once final.
Stefano Domenicali: Of course, there's more content to watch than just a race. Additional series like Formula 2 and Formula 3, The Spirit and F1 Academy, I provide in broadcaster with more content and value.
Stefano Domenicali: Viewership for spring raises consistently shows strong year-over-year growth. With a sprint at the Chinese Grand Prix, seen over one million viewers for the live broadcasts on CCTV in China, and viewership doubly in Italy as Louis Hamilton celebrated his maiden a win for the ride.
Stefano Domenicali: Outside of the race weekend, dry to survive season 7 reached Netflix Global Top 10 for another year and appeared in the Top 10 list across 39 countries.
Stefano Domenicali: The F1 Academy DocuSeries without sanction is going live on Netflix on May 28th. The Apple Movie announcement is premiere date on June 16th with a film soundtrack and film merchandising released just last week at Miami.
Speaker Change: On the sponsorship front, we entered the year with high visibility for 2025 and a strong pipeline for additional growth potential.
Speaker Change: Recent new deal announcement include Barila Parta as an official partner in BWC as our official consultant partner. As part of the BWC agreement, they will provide strategic consulting to our global business to help enhance our performance and drive operational and all that we should see in excellence.
Speaker Change: Our team continues to focus on both 25 and 26 pipeline. We progress be made on a number of high value renewals and new partnership.
Speaker Change: Licensing continues to be a net of focus and growth. Our new license partner Lego has seen high demand for its F1 products selling on average our one piece of Lego every second in the month of March.
Speaker Change: We saw an exciting activation in Miami where all the drivers took part in the regular drivers parade in fully drivable Lego cars.
Speaker Change: On the experiential license in front, a foreign arcade continues to expand to new location. The Boston and Washington DC, may use the whole held sold out watch party for their thrilling groupry to kick off the season.
Speaker Change: A new arcade is opening in Philadelphia May 29th. September Las Vegas, Chicago opening in the fourth quarter.
Speaker Change: The F1 exhibition has sold more than 530,000 tickets in the last 12 months, when those ads are open on March 22nd and sold over 40,000 tickets in its first month. Amsterdam opened in April with the 45,000 tickets sold in advance on its first day.
Speaker Change: In March, we held a launch event for new activation experiences at the Grand Prix Paris in Las Vegas, which opened to the public last week.
Speaker Change: The venue now offers an opportunity to immerse fans in F1E around and provide the Las Vegas community with a new fun and engaging day time activity center.
Speaker Change: Grand Prix Plaza feature an F1's part-carton experience in cooperating part of the Las Vegas Grand Prix circuit. An immersive F1 exhibit, the latest F1 racing simulator of fast-casual iterative are retail store and three private event spaces.
Speaker Change: These activations are set to operate through the first three quarters of the year annually Generative revenue from the site when it is not required for the groumping.
Speaker Change: On former One Sustainability Effort, I'm proud to say that we recently issued a report on our progress from the 2024 season with a full impact report due to this published late of this year.
Speaker Change: We've made significant investment in sustainable aviation fuel, 90% of our promoters improve fan access and travel option and 100% of promoters work with local community organization on programs targeted the next generation.
Speaker Change: In addition, from 2026, the F1 cars will be powered by 100% sustainable fuel, a technology that is becoming increasingly important for the automated sector as country looked for solution to reduce greenhouse gas emission from road transportation.
Speaker Change: A recent power unit manufacturing meeting held in Bahrain demonstrated a clear commitment to the plan 2026 engine regulation and maximized the success of those new rules with all parties working together to ensure the best rates for the championship.
Speaker Change: We expect all the F1 teams to start shifting their focus to the 2026 engine as the season progresses.
Speaker Change: Looking forward, while we are early in our 25th calendar, we already have an eye toward 26. We have agreed the basis on which Cadillac will enter the championship in 26.
Speaker Change: We have also created a new Concord Commercial Agreement with the Teasehood 2026 through 2030, and are making good progress on the governor's term.
Speaker Change: Both the commercial and proposed governance terms are financially attractive for the entire F1 ecosystem. A representative collaboration and partnership we have built with the FIA, F1 teams with the shared goal of growing F1 for our mutual benefit.
Speaker Change: In closing, we are very pleased with our start 2025 season. Our strong-contracted performance growing fan base and robust financial results positioned us well to deliver an excellent 2025 and beyond.
Speaker Change: Avanti tuta full speed ahead and now I will turn the call back over to Derek. Thank you. Ciao
Bye-bye.
Thank you, Stefan Owen Bryan.
Very quick note and exciting news.
Speaker Change: Please stay the date for this year's Liberty Media Investor Day. Changing things up this year, that today will be held alongside the Las Vegas Grand Prix on Thursday, November 20, in Las Vegas.
Speaker Change: We will have more details to share and do course and look forward to seeing many of you there. We appreciate your continued interest in Liberty Media and now I'd like to open a call for questions. Operator?
Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment it may be necessary to pick up your hands that before pressing the star keys.
Speaker Change: Our first question today is from Stefan Lasik of Goldman Sachs. Please proceed with your question.
[inaudible]
Stefan Lasek: Hey guys, thanks for taking the questions. Maybe to start just on team payments and the budget for the year. Brian , curious if you could talk a little bit more about how the team payment budget is structured for the year. And if there were opportunities for upside in that budget.
Stefan Lasek: in terms of what you pay the teams, what some of the larger opportunities out there could be over the course of 2025 as you execute against them and and worship potential of what you think this business could produce this year.
Yeah, thank you. Thank you for the question.
Stefan Lasek: You know, it's the beginning of the year and as we've talked about in the past, there's always prudent financial forecasting at the beginning of the year.
Stefan Lasek: You know, we do think that there's opportunities for upside, but you know, we want to be conservative and thinking about.
Stefan Lasek: The variables that we have out there which are the Las Vegas Grand Prix towards the end of the year and then sponsorship everything else is contracted and as you've seen in the past and we've talked about in recent quarters
Stefan Lasek: You know, the companies moving away from large go-gits and sponsorship in the current year and focusing on future years Are there still opportunities? Yes, there's probably some opportunities there, but the biggest unknown will ultimately be ticket sales which you've heard are trending well currently.
Speaker Change: That's great. Thanks for that. And then maybe just a follow-up on the sponsorship business. It sounds like there's still some focus on bringing in sponsors or renewing in 25. We'd be curious if you just comment on what those are and what extent those could still move the needle. And then I guess as we look at it into 26, it sounds like your attention focus there as well. Longer cell cycles in the sponsorship side is something you've been focused on. Just curious if you could give us an early read or really look into the 26 sponsorship. Follow on to the extent you think that.
Speaker Change: could grow off of 25. What the bands of outcome could potentially look like on that. Thank you.
Speaker Change: I'll just, I'll turn it over to Stephan quickly. I'm getting into that.
Stefan Lasek: Yeah, thank you very much. Thank you for the question.
Okay.
Go ahead, Stevenham.
Stefano Domenicali: Thank you, I mean, I think that we have proven in the last couple of years that our strategy with geographical responsibility is quite solid.
Stefan Lasek: The main focus is for sure to maximize our revenues, but we need to make sure that the partners that we have are stronger, are invested with us, with our experience of world.
Stefan Lasek: You know, we have a strong pipeline and that what we have said already and is conferred to be here is the quality over quantity and a very, very genuine active activation with our practice because you know this is crucial in this moment where we want to make sure that our platform is what really our sponsor wants.
Stefan Lasek: And the evolution between the structure of our partnership between global official, regional and technical is getting stronger and stronger. So the focus is definitely to see if we have seen some opportunities 25, but the big one is keep going on in the next couple of years. And just we might to all of us, we were just the four or five years ago and now what we are today, there is still a long way to go and we are very optimistic on the fact that we will continue to grow back.
Stefan Lasek: as a revenue stream and also as a potential a worldness increase through them to our partners of our products.
Derek Chang: Thanks, Stephanie. This is Derek. I just like to add, you know, I've been able to have the opportunity to spend some time.
Derek Chang: With stuff to know at the track of the last couple races and speaking to both current sponsors
Derek Chang: as well as potential sponsors. I don't think I've been in a situation where I've seen this sort of.
Derek Chang: energy and excitement around the possibilities to engage with the sport to engage with F1.
Derek Chang: normally not normally but in some of my other experiences having been around you know major sports leagues and such you kind of are always in a bit more of a balanced state where you've got guys coming in and guys going out here
Derek Chang: It feels like for the most part the energy is up and it's great to see. And look it goes obviously beyond F1 but to the entire sport and you see what the teams themselves are doing.
Derek Chang: and they themselves are also expanding their sponsor bases, which is great. I spent some time with Zach Brown last week probably one of the more prolific marketers in the panic and he was telling me about his plans to sell the underside of his shoe. So we'll see
That's great. Thank you all.
Bye.
Speaker Change: The next question is from Ben Swinburn of Morgan Stanley . Please proceed with your question.
Thanks. Good morning.
Speaker Change: I don't know if it's Stefano or Jeric either of you want to take this or which one won't take it but on on the media rights process in the U.S. I mean one of the things that I think has happened for the business is F1 TV.
Speaker Change: has been growing really nicely for a number of years and it sounds like in particularly in the U.S. and I'm just wondering how you think about that as an asset or chip to play so to speak in your U.S. media rights deal are you open to.
Speaker Change: bundling that in a broader agreement you know with potentially a streaming partner do you think that business now is so large
Speaker Change: And so the differentiated that you want to keep it as a standalone product And then I don't know if I couldn't tell if the concrete agreement is finalized enough, but I feel that as Brian
Speaker Change: Are you able to tell us whether or not you expect any team payment leverage to take place in the 26 to 30 time frame any color given some of the previous comments we will ask you are in the call on the topic because it looks so much.
Stephanie, why don't you go ahead and start?
Speaker Change: Yeah, well, I mean thanks to the thanks bench for the question. I mean I'll make it right first of all It's always interesting to see the speculation are going around with regard to moments where they were Optimistic and negative comments and so on but but from that I would say we can't back from this weekend in Miami Really with with with with with with with with with a fact
that we are engaged with the multiple partners.
Speaker Change: And there is a lot of potential interest from many of them or which we need to hammer down because we have the time to do it with the proper with the proper with the proper proposal. As you were as you were correctly saying, you know, F1 TV product is growing and is very, very positive and the feedback mainly in US is very, very strong and therefore we need to make sure that this is as it is right and very valuable.
Speaker Change: Therefore, we are open to any kind of possible discussion depending what will be the end and what we believe is the right way to make sure that we keep the penetration on the market as high as possible and make sure that we can monetize out of it.
Speaker Change: But the dynamics are very positive so we keep working on with them and I think that the next month will be crucial to see really where we're going to be. But we come back from Miami as I said at the beginning then with a very good and partly vibes because I think the US audience figured in Miami that we're very, very strong shows the potential that we have. And I'm sure that the media partners understand that for a possible asset also for them to develop another sport business together.
and there you will try and talk to them that.
Subs by www.zeoranger.co.uk
Derek Chang: Yeah, I'd like to, this is Derek, you know, following up on what Stephano just said, you know, we are having good conversations with potential partners on the U.S. media rights deal. I think what's been.
Derek Chang: Sort of interesting here is um the sport itself continues to grow as Stefano mentioned and in particularly in the US the Stefano mentioned in his comments earlier you know viewership across the weekend is up sort of 45%
Derek Chang: year over year. I think F1 TV's growth is up 20% here in the U.S. I think the overall health of the business continues to resonate. And what that means I think 25 even this year
Derek Chang: Renewable negotiation but I think what that means for the long term is pretty significant. I still think we're in the early stages of growth for F1 in the U.S.
and having...
Derek Chang: Having the take-up of F1 TV, what it is in the US at this early stage, I'm going to speak volumes about.
Derek Chang: The passion for the sport. And I think puts us in a great position well into the future. When you zoom back in and think about how you balance F1 TV and a broader media rights deal. Look, we will see how things play out. We will see what partners want in their deals. And we will see what makes the most sense for F1 in terms of balancing.
Derek Chang: Things like Reach, but also having products like this for ourselves.
Derek Chang: So that we can actually understand our customers as well, we can because it goes beyond sort of what we're delivering to them on the content side.
Derek Chang: But also we can deliver the most engaged fans across the board in terms of engaging with that one. So I think that the answer here for my standpoint is we actually see a different way this can go, play out, but underneath it all, underlying it all is extremely strong demand.
Derek Chang: for Fland and the engagement from the fans here in the U.S. which is great to see.
So I've been on your your second question.
Derek Chang: on the 26 commercial agreement, Concord commercial agreement. Yeah, we do expect leverage in 26 to versus where we finish.
Derek Chang: The full year of 2025 and then going forward we expect a more simplified structure that benefits all the parties in the ecosystem.
Thanks so much.
Speaker Change: The next question is from Cutgun Moral of Evercore ISI. Please proceed with your question.
Kurtgun Mural: Good morning. I think I'm taking a question. I just want to ask about MotoGP and it's encouraging that we're getting closer to our regulatory approval there.
Speaker Change: Now that maybe there's a bit more clarity on getting that field done, you could talk a little bit about if anything's changed since the deal was initially announced in terms of the broader opportunity that you see a edge with Moto. Thanks.
This is Derek, I'll take this one.
Speaker Change: Obviously, the deal is not done until it's done and we continue to work with the European Commission to get to the finish line here and are hopeful that we will do so. I think from our perspective, we continue to see
Speaker Change: outside in in MotoGP and are probably, you know, just as bullish has not been we're having spent more time with them at the time that we are allowed to spend with them.
Speaker Change: And look, I think with any of these premium sports assets.
Speaker Change: The trick is how you take these and make them sort of mainstream entertainment assets and you've seen us do that with Formula One. You've seen this happen across multiple of other sports.
Speaker Change: And I think there is that opportunity here and as soon as the deal closes we will be actively engaged with management at MotoGP to start executing on that plant.
Perfect. Thank you.
Speaker Change: The next question comes from Peter Sapino of Wolf Research. Please proceed with your question.
Peter Cepino: Hi, good morning and thanks. A question on sponsorship and one back to the media right on sponsorship.
Hi.
50% fewer races so far the early year and
Peter Cepino: So of course sponsorship revenue has that headland and yet it looks largely offset by growth from new sponsors and so we're wondering
Peter Cepino: Maybe this is too simplistic but does that imply that sponsorship growth must have been close to 50% on an underlying basis adjusted for races those we think about modeling the year is that a useful number and then on the media rights.
Peter Cepino: We're of the opinion that the media rights are sort of uniquely
misunderstood because
Peter Cepino: that race times mean that the casual fan struggles to engage
Peter Cepino: with the live broadcast and so maybe the nonlinear format of streaming could really expand access for casual fans and of course the media rights don't have any advertising and so I wonder if you could comment on both of those opportunities for the media rights. Thank you.
7-0, you're going to start on the media rights.
Yep.
Peter Cepino: Thanks, Derek. I mean, I can start definitely with the media, but I think that is definitely very important to recognize one thing and that it is clear in our in our in our situation where we saw the growth in all our social platform. We saw definitely the interest of the young generation to access to our contents through YouTube or other form of engagement.
Peter Cepino: of the fact that our faculty can get more engaged with us.
will have the the chance to to connect.
Peter Cepino: You know, with the right path is really the key for our strategy and our decision.
Peter Cepino: And I think that what we need to make sure that because now we have different types of times.
Peter Cepino: They need to have the possibility to engage through different options that we need to offer to them.
Peter Cepino: That's the biggest strategic thing that we want to put in place.
Peter Cepino: And of course, Dave is relevant to the partner, but we need to choose and work together into the future.
Peter Cepino: It's relevant because we see the dynamics that are different. Of course, if we see where we are in Europe, in Europe we have a long-term deal with our broadcaster that will enable us to understand what will be the evolution on that market. And we know that there's a different situation that we need to monitor all around the world. But in a nutshell, I think that our strategy will fit with the right partner that will be part of us.
in developing the knowledge of our sport.
Peter Cepino: This is what I can say on the media side, on the sportsmanship side.
Peter Cepino: is really very, very relevant. And this is the reason why we feel very, very positive and strong with our future, even the next couple of years.
Peter Cepino: Thanks, Stephanie Elis, Derek. Peter, that's a, you know, that's a, you're common about, of one being unique. I agree with that. I think that we are uniquely professional. I think when you, again, think about
Peter Cepino: Media right in this day and age it's not about sort of just what's happening on race day for the for the you know I want to have two hours of the race. It's what's happening over the entire weekend.
Peter Cepino: It's also sort of the way different demographics will engage with the property and that's what we are focused on is continuing to deliver.
Peter Cepino: not just sort of the content of the race or even the practices and the qualifying but other content around the sport but also delivering it across multiple platforms.
Peter Cepino: um so that there are multiple ways that fans of any age or any demographic of any interest
Peter Cepino: can engage with the sport because as soon as as I mentioned earlier on on monogetia as soon as you're sort of a broad based entertainment product. You have to recognize that and you have to be able to touch all those people and all those fans.
Speaker Change: I like Brian finish up on that yeah just just add on under the sponsorship side Peter we're not going to give you a specific number in terms of
Speaker Change: of that. But what I would encourage is patience because when you get to Q2 on a year-to-date basis.
Speaker Change: You have 11 races here today. There will be the exact same races. You should get a really good feel for the trend in sponsorship. But there's lots of...
Speaker Change: There's different revenue recognition aspects to your full-year sponsorship that impacted. There's the calendar change. There's new sponsors. There's contract up lists.
Speaker Change: You know, lost contracts from last year that rolled off, so there's lots of different things in there that make it more complex than how you described it.
Give us some cute jokes.
Thank you very much.
Speaker Change: The next question is from Stephen Cahill of Wells Fargo. Please proceed with your question.
Stephen Cahill: Thank you, Brian . Thank you for the guidance on other costs of revenue. Just thinking about that guidance. So I think you said it's going to be consistent with prior years as a percentage of revenue. I think most of us think revenue is going to be up sort of high single digit this year. I think that's an acceleration in other costs versus what you saw last year. So I was wondering if you could just help us understand what in that is that due to labor is that the Las Vegas Grand Plaza or something else. And then congratulations on the on the new Concord Agreement.
Speaker Change: I'm wondering how it contemplates continued focus on competitive balance and if there's anything in the new agreement that might help start to improve the structure of some of the second tier teams, you know, eventually moving up into more competition with the top tier teams. Thank you.
Yeah, I'll start with other costs.
Speaker Change: So on a full year basis, there's going to be items that increase, we always see that we have increased partner servicing and commission costs.
Speaker Change: That support the overall revenue growth of the business that are in there, you have some increased GPP costs as we start the year round activations. Obviously those will be all set by the revenue that's being generated there.
Speaker Change: Otherwise, you know, those are kind of the big things that you would expect, and as we've talked about in the past, you know, we continue to focus on the growth of the business, and so there's growth initiatives that are in there as well to drive future revenue growth in the upcoming years.
Stephanie, do you want to talk about the Concord?
Stephanie: Yeah, I mean, thanks Stephen. I think that as you know for us is essential to make sure that the growth of this port is done in an organic way. And we that we can take on mainly free.
Stephanie: The first one on the sporting side to make sure that the teams can be competitive. We need to make sure that the regulation is done in a way that if there is gaps performance, there is the chance for everyone to recover that.
Stephanie: Techno probably little to the sporting side. I think that we have seen already the massive importance of having the budget cap or the cost cap that has given the possibilities to the team to understand the level of performance from the technical perspective that they can be through the money that they have.
Stephanie: On the other side, point on the tool, you know, it's the financial.
Stephanie: And we see definitely that the healthy system allow through also conquered and other spaces that are becoming important for the teams where the solid team that wants to stay and be even stronger and be competitive for the future.
Stephanie: The point is the awareness that the sport is living is bringing interest money to all the ecosystem that will regenerate the possibility of these organic growths through what we are doing. And therefore, I think that what we have done with a fair and balanced approach to hunger has just brought the right approach and the right settings.
Stephanie: for a very very healthy ecosystem that will be there for the future in the next couple of years will be characterized by these kind of elements.
Thank you.
Speaker Change: The next question is from Ryan Gravitt of UBS. Please proceed with your question.
Speaker Change: Great. Thanks. Teri, if you can give us an update on our renewal discussions are progressing for some of your non-US media rights. I believe there are some deals coming up in Latin America and some Asian markets.
Speaker Change: So any color on the competitive tension you're seeing for those rights and if you're likewise seeing any interest from digital players.
Thank you very much.
Bye-bye.
Speaker Change: Yeah, yeah. Thank you, Brian . Yes, of course, that is a more dynamic and I would say year by year situation. We have so many countries around the world that then in in in in certain area, we can start to see some competition with regard to the streaming side of it. There are kids smaller than what you can imagine, but it's definitely a healthy situation. We have countries like Japan. For example, that is quite big for us. What are there in the
Speaker Change: Party Stasia and also in Brazil, for example, that will have an evolution and will have a positive impact in our relationship in the starting film next year.
Got it, thank you.
Thank you.
The next question is Joe Stoff, a Susquehanna International Group.
Please proceed with your question.
Speaker Change: Thank you. Good morning. I was wondering first question on whether or not you could share with us any organic or same race commentary. You know, penny.
Speaker Change: any KPIs you have with respect to the two races in the first quarter and then secondarily, Stefano, maybe you'll follow up on an earlier question about team competition.
Speaker Change: It certainly seems parody where the competition has increased, you know, especially last season and maybe season today. And I was just wondering all those three buckets you mentioned, you know what? What were the most important reasons or improvements that you have made thus far?
Thank you.
Speaker Change: I mean, I really want to go ahead and maybe I...
[inaudible]
Sorry, go ahead, step it up.
Thank you.
Speaker Change: Then I will say, Brian , if you want to give your comment on the organic and KPI is the first question that I will jump in on the second question of Joe.
Yeah, I would say is, you know.
Speaker Change: Do the math on what we've reported here. We can't give you anything more specific than kind of what we're already showing but
Speaker Change: There's a mix of races, obviously, and so you've got Australian China this year, you've got the two Middle Eastern races last year with China not being in the mix, and you can see the impact that you have there on revenue and a wipe it off.
If I could go to the second question.
Speaker Change: Yeah, I was just going to say, stepping up, there's anything you want to add on attendance or paddock club at the one race where we had it, you can add that, but...
Let's be about it.
No, I think that's it.
Speaker Change: I think Brian you are absolutely spot on I mean the dimension of comparing apple with peers it is pretty clear that it's not even the same kind of balance I think that as you already mentioned there will be a clear situation the more we go ahead.
Speaker Change: into the next quarter because there will be, you will see there are gathered growths that we are having everywhere.
Speaker Change: and and and that's it would be very very clear so on that just just just
Speaker Change: I want to shed good news that is happening all around the world, Olsen, that is attacked.
Speaker Change: There is not only the counter that we have in term of
Speaker Change: commercial agreement, but also all the other activities that are related to the rampated are different to place to place. So, the right companies will be done exactly when we don't have. At the end of the year, the final results, but everything is progressing absolutely in the right way.
Speaker Change: Going back to the second question of Joe about the team competition. We don't have to forget that on top of the three parts that I said that is also the things that after many years naturally the cycle of having the evolution that is becoming close to the tangent is bringing the things to be very close. If you see this year mainly in qualifying the gaps out of milliseconds, so that is really impressive.
Speaker Change: That's what I did part of what we see today and it's also even more relevant to say that when we take the decision to change regulation.
Speaker Change: It is normal and there are reasons for that of course.
Speaker Change: that potentially there will be more gaps in performance at the beginning but the regulation we are putting in place will try to minimize or the time on which the teams and the new power you need to manufacture that they were allowed to come in and also a new team that will come in will have the time to react to that. So I think that the tri-pilots are very relevant even more when there is a step change of regulation as it will be done next year but as we will now
member to all of us.
Speaker Change: We're down to allow to new power units manufacturing the team to come in and also to have the focus on the sustainable fuel and hybrid energy that was relevant for us to keep in a sort of keeping the technology relevancy for the future in our sport.
Thanks very much.
Speaker Change: The next question is from Spencer Amir of Deutsche Bank. Please proceed with your question.
Speaker Change: Hi, thanks for the question. You announced a 10-year extension for the Miami Grand Prix with a number of years left on the current deal. I was wondering if you could shed some color on what made you decide to extend the Grand Prix so early.
Speaker Change: I can answer to that. Yes, thanks for the question. You know, we believe that the Miami Grand Prix is a very important pillar of our strategy in U.S. I mean, the job done is really very impressive. And of course, we want to give the possibility for them also to keep investing.
Speaker Change: And the more we are able to give that kind of a certainty the more they will invest to grow together not only of their business evolution, but also in order to better in order to have the right.
Speaker Change: partnership to develop where you know the American sides together with them. They've been proved to be a very very solid and strong partner and that's the reason why we haven't dissipated now because there was no reason to wait.
Speaker Change: Yeah, and just from my standpoint, you know, I went to the first Miami race and then just this last one I think the improvement and what has happened there on the ground has been pretty impressive. So, you know, it could as two our partners in Miami for what they've done and we look forward to their continued investment.
in the race.
Speaker Change: Our next question is from Jason Bisonett of City Bank. Please proceed with your question.
Jason Bissonnette: I just had a very simple question. You rightly pointed out that your business is defensive and is viewed as defensive by investors. The one question we get is people aren't quite sure how to think about
Speaker Change: The defensiveness of the sponsorship revenue if there wasn't economic slowdown.
Speaker Change: Just I think that the answer for that is no one has been able to what we have in front of us but what we can see that the credibility of our platform and the fact that we are very close to them with the with the fact that we are discussing on the daily basis what are the need that we need to supply to that is our strength. We are very close to them with the fact that we are very close to them.
Speaker Change: And the fact that we are long-term agree with sponsors is of course a financial covering the theme of the risks.
Speaker Change: that we have but that is more relation we have that has been with on the trust and understanding each other what has the need.
Speaker Change: That's why, you know, as I said, that we are always very prudent, but the religion we have, and the quality of the parts that are working together with us, allow us to be very, very positive. We have long-term counter that, of course, that will reduce that financial risk.
Speaker Change: And the good thing is to stay connected and to try to see that it's happening how we can just together to make sure that our platform will offer to them what they need.
Speaker Change: Yeah, and just a continuation of what Stefano just said, I mean the quality...
Speaker Change: of our partners and sort of the longer term nature of the deals I think certainly the near term.
Speaker Change: Hopefully it exploits us from some of the any potential macro headwinds here.
Speaker Change: You know, I think that the way to think about it is that the partners we have are really looking for broad global exposure and we provide that and we provide that frankly almost better than anyone else out there and so.
you know the supply for them is is
Speaker Change: is not huge and so we provide that and we provide that our way of stephenoso when we are actively working with our partners to maximize.
Speaker Change: sort of the relationship for them and for their targets and the initiatives that they have and I think that you know, again, this is somewhat qualitative but just in the conversations with our partners and understanding what their needs are. They are enthusiasm.
Speaker Change: And these potential headwinds in the economy have, it's not like they came in yesterday they've now been around for a couple months or speculation of them. The way these guys continue to speak about their business and the way they want to grow their business and how we can help them achieve those targets is been.
You know, very reassuring.
Speaker Change: Is it fair to say it's not as contractual and heavy to my head?
Yeah.
Speaker Change: Yeah. I'm just going to add. Just to add that we haven't seen. Yeah.
Good.
Thank God, Jason, can you hear me?
Speaker Change: Go ahead, Jason. Why don't you just ask your next question and then step up and I'll answer both.
Speaker Change: Okay, I was just going to say that if we're investors, is it fair to say it's not as contractual as media rights but maybe more defensive than if you had an advertising business, is that the right framing of it?
No.
Speaker Change: I think these are, it's not like, it's not like media.
Speaker Change: media deals in a sense of advertising deals in a sense of buying those sort of quarterly or even annually. These are long-term deals just like our media rights deals. I think, you know, we're not going to get into the details of how long each one is. We've probably mentioned some of them, but I do think that...
I don't like any media deals.
Speaker Change: So on the sponsorship side and just like we talked about Miami, our partners want to invest in what they partnered up with and that takes multiple years to make the investment activate on that investment and meet the benefits of that. That's why from a partner standpoint, they want to come in longer term with us.
Stefano Domenicali: And I think, again, as a result, we have these sort of, you know, mid-to-long-term contracts with most of these folks. And I think that helps us in times like this. That's definitely what you want to finish up.
No, I totally agree there again.
Speaker Change: to be to be very transparent. We haven't seen any slow down in our conversation despite the market situation we have today with the other potentials.
Speaker Change: That is related to what we just said about the credibility of our platform to the fact that in any case, you know, we believe that Dina worldwide sport, worldwide sport, we can be perturbed for each of them to differentiate the strategy they need to do it.
Speaker Change: Well, I would say that's the situation that we live in today so it's all good.
Very helpful, thank you.
Speaker Change: Our last question today comes from Matthew Harrigan of Benchmark. Please proceed with your question.
Matthew Harrigan: Thank you, as everyone does, the LEGO drivers parade was marketing genius, incidentally.
Speaker Change: Hey, I have a question. You're really putting up great engagement metrics across the board. I mean linear
Speaker Change: is encouraging as well as social and I think you're probably breaking out maybe more than anyone else and social
Speaker Change: But nonetheless, I mean, that doesn't really monetize and sometimes it doesn't even really translate to people watching there.
Speaker Change: The linear channel I think is just younger people's way they consume content in shorter form, including sports and F1. Do you have any thoughts on...
Speaker Change: How you might be able to better engage, you know, people are better monetized rather people who have shorter attention spans versus someone who's going to get up and watch a race for two hours. Thank you.
Speaker Change: How do you want to start? Well, Matthew, can I say? Yeah, then, well, thanks, Derek. I think thanks for the comment we take with pride because we've never stopped. We tried to be different for the other the other platforms to create some sort of details of what we are doing. And by the way, as Derek said at the beginning of the call
Speaker Change: The great news is that we have our drivers and our partners that are embracing our strategy because they understand the value of it.
Speaker Change: It is clear that the more we are able to do these kind of things, the more we are going to be able to monetize all what we are doing.
Speaker Change: It will be wrong to believe that you can monetize everything straight away, and that's why on that we have a
Speaker Change: strategy that needs to be diverse but also very very very complete. We have a you know we need to make sure that our engagement with our fans is not only to also the race of the Sunday but we need to have a free almost 55 days a year of engagement.
Speaker Change: try to tailor the content and and this is really what we try to do
Speaker Change: in order to get access to the data we are available in order to get into the
Speaker Change: the consumer habits of our fans. This is something new for us. So that's why I see potentially another important revenue stream that will allow us to be strong in an era where so far we were maybe over the week.
Speaker Change: But the potential to grow is definitely there and the only thing that can come is if we are able to be creative as much as we can in order to be different for the other proposition.
Thanks for having us, thanks Derek.
Matthew Harrigan: Yeah, Matthew, thank you for the question and just follow up on stuff and then we'll close it out here but
Matthew Harrigan: You know, what Feminine is saying is absolutely right. You're building an ecosystem. You've got a funnel here where you are trying to bring in as many people as you can do engage with the sport.
Matthew Harrigan: Certain platforms historically have been more monetizable directly than others, but at the end of the day we're not necessarily looking to maximize revenue on each particular platform, each particular content, contact that we have with a fan.
Matthew Harrigan: We are building the, you know, the whole universe and the whole ecosystem here. So the fan sort of interacts with...
Matthew Harrigan: That's not instantly monetizable. That fan may go and purchase an F1 shirt. That fan may ultimately attend a race. That fan may end up in Las Vegas one day want to go to Grand Prix Plaza.
That fan may tell their parents to start watching races.
Matthew Harrigan: So I think that there are so many ways that we ultimately will monetize.
Matthew Harrigan: Sort of any of these points of contact that not every single point of contact that it itself has to be monetized.
Matthew Harrigan: So with that, I will close the call for this quarter. I want to thank all of you on the call who have participated and all the questions, great questions that we received. We appreciate your support and look forward to continuing the dialogue. Thank you very much.