Q1 2025 Liberty Media Corp Earnings Call
The class is adjourned.
Speaker Change: Welcome to Liberty Media Corporations 2025 Q1 Erdings Call. During the presentation, all participants will be in a listen only mode.
Afterwards, we will conduct a question and answer session.
Speaker Change: 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.
Thank you and good morning
Speaker Change: Before we begin, we'd like to remind everyone that this call includes certain foreign looking statements within the meaning of the private security's litigation reform act of 1995. 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 certain non-GAAP financial measures for Liberty Media, including adjusted with that. The required definition of 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 Wendling, Formula One's President CEO , Stafford Dominic Alley, 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 Dora acquisition to continuing our path towards structural simplification, and three, we continue to drive momentum at Formula One, starting first with the Dora acquisition.
Derek Chang: We are progressing with the phase two regulatory process and working constructively with the European Commission. We hope to receive approval by the long-stop date of June 30, 2025. MotoGP kicked off 2025 with its first ever season launch event in Bangkok.
Derek Chang: 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 in 2025.
Derek Chang: 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 independence across the first five races completed to date.
[inaudible]
Derek Chang: The Argentina Grand Prix set a new attendance record for the track with over 200,000 spectators.
Thailand's already attendance was up 15%
and CODA hosted its largest crowds since 2018.
Derek Chang: and a red sauce highest attended since 2015 with 24% growth over 2023.
Derek Chang: Company and 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.
Derek Chang: Our second priority is continuing to progress our structural simplification, including the Plants, but also the Liberty Lives.
Derek Chang: Our third priority is continuing to drive momentum at Formula One. The consequence of excellent racing and commercial momentum is benefiting engagement and financial results in 2025. There are several areas currently in focus worth highlighting.
Derek Chang: We are seeing continued momentum in sponsorship and licensing to start the year.
Derek Chang: In an excellent showcase with the LEGO partnership last weekend in Miami, where all 10 teams rode in fully drivable LEGO F1 cars for the driver's parade. The project took over a year to come to life and required 400,000 LEGO bricks per car. It was an amazing collaboration that captivated our fans and the internet.
and our drivers lost it.
Derek Chang: Looking ahead, fully-responsorship pipeline forward has allowed our team to focus on 2026 and beyond and emphasize secure and blue ship names aligned with the F1 brand. The appeal and breadth of the F1 brand are uniquely resonating with sponsors across B2B and consumer brands alike.
Derek Chang: Second, we are focusing on improving LVGP standalone economics and maximizing the overall benefit to the F1 ecosystem.
Derek Chang: Dickets went on sale on early April and volumes are trending ahead of this time last year.
Derek Chang: Lumber initials ticket prices are driving momentum which we expect will drive greater
Derek Chang: 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.
Derek Chang: Finally, our current U.S. media rights agreement concludes at the end of 2025.
Derek Chang: And we are an active and productive discussion for a new deal. S1 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 835, females representing 42% of the fans.
Derek Chang: We remain focused on finding the right partner to continue to innovate on broadcast offerings and sustain on events in the US.
Derek Chang: While it's early in the year, performance today is strong. The contractual nature of the Formula One cash flow provides high visibility into our business performance for the next several years, and will be especially important in this macro economic climate.
Derek Chang: As of March 31, Formula One has $14.2 billion dollars of future revenue secured under contract.
Derek Chang: Advanced ticket sales for our promoters and hospitality tickets for the remainder of the season remain 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.
Derek Chang: We are encouraged by the strength of the business and look forward to completing the rest of an exciting season.
Derek Chang: Now, I'll turn it over to Brian from Warren, Liberty's Financial Results. Thanks, Derek, and good morning everyone.
Speaker Change: At 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 Quence.
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-1500 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 of 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.
Speaker Change: 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 as only 224 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 declined during the first quarter as a result of one last paddock club event in the mix of races held.
Speaker Change: Adjusted weapon has declined alongside revenue during the quarter driven by the counter barracks.
Speaker Change: Other costs of F-1 revenue increase due to higher freight 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 a point-your-basis, we expect other costs 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 full year.
Speaker Change: Team Payments decreased in the first quarter due to the lower pro-radar recognition with one less race hell 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 to Waibato was 61.5 in 2024, and we expect that percentage to continue to come down as we complete the term of the Caracoglore 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 over 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: Grand Prix Plaza in Las Vegas, officially opened its new year-round activations on May 2nd. Preventing from these activations will be recognized at the F1 OPCO 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 required to build up Grand Prix Plaza activations was incurred in the first quarter. Total F1AP 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 quit results in approximately 6 million of rental income related to the Las Vegas Grand Prix Plaza.
Speaker Change: Corporate Another Adjusted Oval Office is 12 million and includes Grand Prix Plaza Rental Income, Quint 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 tribute cast of 314 million and 400 million of Andron Margement capacity relating to our Live Nation Margement Home.
Speaker Change: As of May 6th, the value of our Live Nation stock held at Liberty Live Group was $9.3 billion and we have $1.5, $1.15 billion in principal amount of debt against these holdings.
Speaker Change: 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 opt to a great start in 2025.
Stefano Domenicali: We are six raises into the season and continue to see exciting on track action.
Stefano Domenicali: The winds have been spread across teams and the racing is tighter than expected. While early in the season, we expect the action to continue. The strong contract performance has fueled further engagement.
Stefano Domenicali: Antendices is up over last year with sell-out crowds and nearly all races to date. We'll reach 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 season 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 Padau Tower, Padau 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 on alternative and innovative hospitality products where the men, our strips supply.
Stefano Domenicali: Turning to viewership statistics across our top 50 markets like the viewership grew for the first five races of the season.
Stefano Domenicali: We have 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 of five races.
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. Infocising 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. Take Talk and YouTube.
Stefano Domenicali: Looking more broadly, Nilsen released new fan data in March showing the continuous search in F1 fandom. With our total fanbase 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 engagement 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 to work finalizing our 26 calendar.
Stefano Domenicali: We were excited to announce the 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 US market.
Stefano Domenicali: The vast majority of our races are now secured on the medium and long-term conflicts. The man's from potential new races host remains robust.
Stefano Domenicali: and we are evaluating by its opportunities for the future. The Netherlands will host their final race in 2026 as part we race in alternative years from 2027, leaving an opening on the calendar in 2028.
Stefano Domenicali: Tickets for Las Vegas went for sale April the 9th, featuring new ticket price and offerings.
Stefano Domenicali: Take it now, start 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 ship Velocity Vegas is meaningful outpatient last year.
Stefano Domenicali: Our MediaRide business continues to demonstrate the growing competition for McKee's port rights. If one TV subscriber growth continues to be robust, we total subscriber up 4% year over year, led by the U.S. market up 20%.
Stefano Domenicali: The launch of our new F1 TV Premium, tier has outperform expectation, especially in
Stefano Domenicali: We are in active and positive discussion for our US 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 are providing broadcasted with more content and value.
Stefano Domenicali: Viewership for spring's races consistently shows strong year-over-year growth. With the spring at the Chinese Grand Prix, seen over one million viewers for the live brokers on CCTV in China, and viewership doubly in Italy as Louis Hamilton celebrated his maiden went 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.
Stefano Domenicali: On the sponsorship front, we entered the year with high visibility for 2025 and a strong pipeline for additional growth potential.
Stefano Domenicali: Recent new deal announcement include Barila Pasta, as an official partner, and 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 efficiency and excellence.
Stefano Domenicali: Our team continues to focus on both 25 and 26 pipeline, with progress being made on a number of high value renewals and new partnership.
Stefano Domenicali: Licensing continues to be a net of focus and growth. Our new licensed 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.
Stefano Domenicali: We saw an exciting activation in Miami where all the drivers took part in the regular drivers parade in fully drivable LEGO cars.
Stefano Domenicali: On the expiration license in front, a foreign arcade continues to expand to new location.
Stefano Domenicali: The Boston and Washington D.C. menus the whole health, sold out, watch party for their thrilling groupie to kick off the season. A new arcade is opening in Philadelphia May 29th. In December , Las Vegas, Chicago opening in the fourth quarter.
Stefano Domenicali: The F1 exhibition has sold more than 530,000 tickets in the last 12 months, where those ads are open on March 22nd and sold over 40,000 tickets in its first month. Amsterdam Open in April , with the 45,000 tickets sold in advance on its first date.
Stefano Domenicali: 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.
Stefano Domenicali: 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.
Stefano Domenicali: Grand Prix Plaza feature an F1 Spark Cartoon Experience incorporating part of the Las Vegas Grand Prix circuit and immersive F1 exhibit. The latest F1 racing simulator, a fast-casual eaterity, a retail store and three private event spaces.
Stefano Domenicali: 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
Stefano Domenicali: 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 later this year.
Stefano Domenicali: We 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 targeting the next generation.
Stefano Domenicali: In addition, from 2022-26, 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 solutions to reduce greenhouse gas emissions from road transportation.
Stefano Domenicali: A recent power-earning manufacturing meeting held in Bahrain demonstrated a clear commitment to the plan 2026 engine regulation and maximized the success of those new roads with all parties working together to ensure the best rates for the championship.
Stefano Domenicali: We expect all the F1 teams to start shifting their focus to the 2026 engine as the season progresses.
Stefano Domenicali: Looking forward, while we are early in our 25th calendar, we already have an eye toward 26.
Stefano Domenicali: We have agreed the basis on which Cadillac would enter the championship in 26th
Stefano Domenicali: We have also created a new Concord commercial agreement with the T-School 2026 through 2030 and are making good progress on the governor's term.
Stefano Domenicali: 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 neutral benefit.
Enclosing.
Stefano Domenicali: We are very pleased with our start 2025 season. Our strong contract performance growing fan base and robust financial results positioned us well to deliver an excellent 2025 and beyond.
Avanti tutta!
Stefano Domenicali: Full speed ahead and now I will turn the call back over to Derek. Thank you. Ciao
Thank you.
Thank you, Stefan. I would Brian .
Very quick note and exciting news.
Stefano Domenicali: Please say the date for this year's Liberty Media Investor Day. Changing things up this year, better day will be held alongside the Las Vegas Grand Prix on Thursday, November 20th in Las Vegas.
Stefano Domenicali: 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 the 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 one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue.
Stefano Domenicali: For participants using speaker equipment it may be necessary to pick up your hands that before pressing the star keys.
Stefano Domenicali: Our first question today is from Stefan Lasik of Goldman Sachs. Please proceed with your question.
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 paid the teams, what's some of the larger opportunities out there could be over the course of 2025 as you execute against them and and receive 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. 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
Speaker Change: 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 renewing in twenty five. [inaudible]
Speaker Change: We'd be curious if you could 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 cells like those in the sponsorship side. Something you've been focused on just curious if you could give us an early read early look into the 26 sponsorship funnel into the extent you think that could grow off of 25 what the band of outcome could potentially look like on that. Thank you. Thank you.
Stephanie: I'll just, I'll turn it over to Stem and I'll bring you to that.
Stephanie: Yeah, thank you very much. Thank you for the question.
Okay.
Go ahead, Stefano.
Stefano Domenicali: Thank you. I mean, I think that we have proven in the last couple of years that our strategy with we have in this country is quite solid.
Stefano Domenicali: The main focus is for sure to maximize our revenues, but we need to make sure that the partners that we have have stronger are invested with us with our experience of wealth.
Stefano Domenicali: You know we have a strong pipeline and that what we have said already and it's conferred to be here is the quality over quantity and and very very genuine active the activation with our purpose because you know this is crucial in this moment where we want to make sure that our platform is what really our sponsor wants.
Stefano Domenicali: 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 made to all of us, where 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.
Stefano Domenicali: as a revenue stream and also as a potential a world is increased 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 over the last couple of 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 it did some of my other experiences having been around you know major sports leagues and such are 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, 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 happens.
That's great. Thank you all.
Bye-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 definitely over there. I don't know if either of you want to take this or which one won't take it but on on the media rights process in the US and one of the things that I think has happened for the business is F1 TV. Has been growing really nicely for a number of years and it sounds like in particularly in the US I'm just wondering how you think about that.
Speaker Change: As an asset or chip to play so to speak in your US media right scale are you open to bundling that in a broader agreement you know with tension 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 think 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 26-30 time frame in a color given. In some of the previous comments, we will ask you earnings calls on the topic that we hope will work so much.
Devon, why don't you go ahead and start?
Speaker Change: Yeah, I mean thanks to the thanks bench for the question. I mean let me be right
Speaker Change: First of all, it's always interesting to see the circulation going around in regard to moments where there were optimistic negative comments and so on, but from that, I would say we can back from this weekend in Miami. Really with a with a with a with a with a with a with a 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.
Speaker Change: And therefore we need to make sure that these are cities 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 where we're going to be. But we come back from Miami as I said at the beginning of the event 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 that it's going to possible, I said also for them to develop another sport business together.
There you will turn out in a minute.
[inaudible]
Derek Chang: Yeah, I'd like to, this is Derek, you know, following up on what Stefano just said, you know, we are having good conversations with potential partners on the U.S. Media right here, I think what's going to happen is, you know, we are having a great conversation.
Speaker Change: Sort of interesting here is the sport itself continues to grow as Stefano mentioned and particularly in the US the Stefano mentioned in his comments earlier you know viewership across the weekend is up sort of 45%
Speaker Change: year over year. I think that one 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, I think, I think that if I'd even this year, but I miss it.
Speaker Change: 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 US.
and having...
Speaker Change: Having the take-up of F1 GBB, what it is in the US at this early stage, I speak volumes about...
Speaker Change: 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.
Speaker Change: Things like Reach, but also having products like this for ourselves.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: It's extremely strong demand for F1 and the engagement from the plans here in the U.S., which is great to see.
I've been on your your second question.
Speaker Change: on the 26th commercial agreement, Concord commercial agreement. Yeah, we do expect leverage in 26 to versus where we finish.
Speaker Change: 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.
Kurt Gunn-Murau: 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 regulatory approval there. Now that maybe there's a bit more clarity on getting that deal 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 ahead with Moto. Thanks.
This is Derek. I'll take this one.
Kurt Gunn-Murau: outside in MotoGP and are probably, you know, just as bullish if not we're having spent more time with them at the time that we are allowed to spend with them.
Kurt Gunn-Murau: And look, I think with any of these premium sports assets.
Kurt Gunn-Murau: The trick is, 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.
Kurt Gunn-Murau: 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 plan.
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. Shed.
Bye.
Peter Cepino: 50% fewer races so far year-over-year and so of course sponsorship revenue has that headland and yet it looks largely offset by growth from new sponsors and so we're wondering. Thank you very much.
Speaker Change: 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.
Speaker Change: We're of the opinion that the media rights are sort of uniquely misunderstood because
The race times mean that the casual fan struggles to engage.
Speaker Change: with the live broadcast until 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.
Devina, you're going to start on the media rights.
Yep.
Derek Chang: Thanks, Derek. I mean, I can start definitely with the media. 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 our on all our social platform. We so definitely the interest of the young generation to access to our content for YouTube or other form of engagement.
Derek Chang: of the fact that our fact that can get me more engaged with us.
will have the the chance to connect.
Derek Chang: You know, with the right process is really the key for our strategy and our decision.
Derek Chang: And I think that what we need to make sure that because now we have different type of positive fans
Derek Chang: They need to have the possibility to engage through different options that we need to offer to them.
Derek Chang: That's the biggest strategic thing that we want to put in place.
Derek Chang: And of course, data is relevant to the partner, but we need to choose and work together into the future.
Derek Chang: It's relevant because we see the dynamics of the different of course of course if we see well we are in Europe in Europe we have a long term deal with our broadcast that will enable us to understand what would be the evolution on that market and we know that is 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 would be part of us.
in developing the knowledge of our sport.
Derek Chang: This is what I can say on the media side, don't dispose of your side.
Speaker Change: If I may a picture, I think that the relevance of what we're doing is to come by the quality and the numbers that we put in place every year. That means that as correctly that it was seen before, you know, the part that are working together with us for one, are really different from B to B opportunity to consumer and we are offering an incredible opportunity of engagement.
Speaker Change: that I would say without being disrespectful that our platform is becoming 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.
Derek Chang: Thanks, Stephanie. I was there. Peter, that's a, you know, that's a, you're coming about of one being unique. I agree with that. I think that we are uniquely professional. I think when you, again, think about
Derek Chang: 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.
Derek Chang: 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.
Derek Chang: 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.
Derek Chang: So that there are multiple ways that man's of any age or any demographic of any interest.
Derek Chang: can engage with the sport because as soon as as I mentioned earlier on on MotoGP as soon as you're sort of a broad based entertainment product
Derek Chang: You know, you have to recognize that and you have to be able to touch all those people and all those fans. I like Brian finish up on us. Yeah, just just add on under the sponsorship side Peter. We're not going to give you a specific number in terms of.
Derek Chang: of that but what I would encourage is patience because when you get to Q2 on a year-to-date basis.
Derek Chang: You have 11 races here today. They'll be the exact same races. You should get a really good feel for the trend in sponsorship but there's lots of.
Derek Chang: There's different revenue recognition aspects to full-year sponsorship that impact it. There's the calendar change. There's new sponsors. There's contract up lists.
Derek Chang: 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 Q2.
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?
Stephen Cahill: Um, and then congratulations on the on the new Concord agreement. I'm wondering how it contemplates.
Stephen Cahill: 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.
Stephen Cahill: So on a full year basis, you know, there's going to be items that increase. We always see that we have increased partner servicing and commission costs.
Stephen Cahill: 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 offset by the revenue that is being generated there.
Stephen Cahill: 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 even I think that as you know for us is essential to make sure that the growth of the sport is done in an organic way and a way that we can take on mainly three.
Stephanie: The first one on the sporting site 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: I think that we have seen already the massive importance of 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 they have.
Stephanie: On the other side, point number two, you know, it's the financial.
Stephanie: And we see definitely that the health 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 third 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 roles through what we are doing. And therefore, I think that what we have done with a fair and balanced approach to I 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. I'm curious 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 at any color on the competitive tension you're seeing for those rights and if you're likewise seeing any interest from digital players. Thanks.
Thank you.
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 stream side of it. There are kids smaller than water. 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 Far East Asia?
Speaker Change: And also in Brazil, for example, that we'll have an evolution and we'll have a positive impact in our, in our relationship in the start and so next year.
Got it, thank you.
[inaudible]
Speaker Change: The next question is Joe Stoff, a Susquehanna International Group. Please proceed with your question.
Joe Stauff: 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, any.
Joe Stauff: any KPIs you have with respect to the two races in the first quarter and then secondarily, Stefano, maybe you'll follow up on a earlier question about team competition.
Speaker Change: It certainly seems parody or the competition has increased, you know, especially the last season and maybe season today. And I was just wondering all those three buckets you mentioned, you know what?
Joe Stauff: What were the most important reasons or improvements that you have made thus far?
Bye.
Joe Stauff: I mean, I wouldn't want to go ahead. That's right. And maybe I...
Let's go ahead and step it up.
Speaker Change: And I was saying, Brian , if you want to give your comment on the organic and KPI is the first question that I would jump in on the 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 braces obviously and so you've got you've got Australian China this year you've got the two Middle Eastern races last year with China not being in the mix.
Speaker Change: And you can see the impact that you have there on revenue and won't wipe it off.
And it's probably if I go to take some questions.
Speaker Change: Yeah, I was just going to say stepping up, there's anything you want to add on attendance or panic 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 were absolutely spot on. I mean the dimension of comparing Apple with peers. It is pretty clear that it is not the same kind of balance. I think that as you already mentioned, there will be a clear situation where the more we go ahead.
Speaker Change: into the next quarter because there will be you will see the organic growth that we are having everywhere and 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, all of a sudden that is stuck.
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 ground printed 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 points 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 teams 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 new team that will come in will have the time to react to that. So I think that the three pillars are very relevant even more when there is a step change of regulation as it will be done next year, but as we remain.
Speaker Change: Remember to all of us. We're down to allow to new power units manufacturing the team to get in and also to have their 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. As ordered, 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 certainty the more they will invest to grow together not only of their business evolution, but also in order to gather.
You know that we have the right...
Speaker Change: partnership but 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, into 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.
Speaker Change: You know, could those 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: It's said 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
Jason Bissonnette: The defensive miss of the sponsorship revenue if there was an economic slowdown.
Jason Bissonnette: Jason, I think that the answer for that is no one is imaginable, but the what we have
Jason Bissonnette: in front of us but what we can see is 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 a daily basis what are the need that we need to supply to their is our strength.
Jason Bissonnette: And the fact that we are long-term agreed with sponsors is of course a financial covering the term of the risks that we have but that is more relation that we have that has been with on the trust and understanding each other what are the needs.
Jason Bissonnette: That's why, you know, as I said, that we are always very prudent, but the relationship 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 content that, of course, that we will use that financial risk.
Jason Bissonnette: And the good thing is to stay connected and to try to see that is happening how we can just together to make sure that our platform will offer to them what they need.
Speaker Change: Yeah, and this you know a continuation with stuff and I 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's lights us from some of the any potential macro headwinds here. I, you know, I think the way to think about it is that the partners we have are really looking for broad global exposure.
Speaker Change: And we provide that. We provide that frankly almost better than anyone else out there. And so, you know, the supply for them is is.
Stefano Domenicali: is not huge and so we provide that and we provide that our way of stepping off so that we are actively working with our partners to maximize.
Stefano Domenicali: 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.
Stefano Domenicali: And these potential headlines in the economy have, it's not like they came in yesterday they've now been around for a couple of 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.
Stefano Domenicali: Is it fair to say it's not as contractual as we do right now?
Yeah.
Stefano Domenicali: And I'm just going to add. Just to add that we haven't seen. Yeah.
Bye.
Thank God Jason can you hear me?
Speaker Change: Go ahead, Jason. Why don't you just ask your next question and then step it up and you can answer both of them.
Jason Bissonnette: 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?
Now.
I don't like any media deals.
Jason Bissonnette: 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 well for years.
Jason Bissonnette: 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. But definitely, do you want to finish up?
No, I totally agree, Derek.
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 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. [inaudible]
Speaker Change: So, I would say that's the situation that we live in today, so it's all good.
Very helpful. Thank you.
Our last question today comes from Matthew Harrigan of Benchmark. Please proceed with your question.
Thank you.
Speaker Change: 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 in 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 it's just younger people's you know way they consume content and shorter form including sports and and f1 give me 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.
Don't know you want that.
Well, Matthew, can I sit?
Speaker Change: Yeah, well thanks Eric, I think thanks for the comment we take with pride because we never stopped. We tried to be different from the other, the other platforms to create some sort of business where we are doing it. And by the way, as that is said at the beginning of the call, 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're 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: and try to tailor the content and and this is really what we try to do.
Speaker Change: in order to get the access to the data we are available in order to get into the consumer habits of all our fans.
Speaker Change: 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 area where so far we may be able to be weak.
Speaker Change: But the potential to grow is definitely there and the only thing that can come is if you are able to be creative as much as we can in order to be different for the other proposition.
Thanks, sir. Thanks, Derek.
Speaker Change: Yeah, Matthew, thank you for the question and I just follow up on stuff and then we'll close it out here but
But he.
Speaker Change: You know, what Stefano 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 you can do engage with the sport.
Speaker Change: 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, or each particular content, contact that we have with a fan.
Speaker Change: We are building the, you know, the whole universe and the whole ecosystem here. So the fan sort of better actually.
Speaker Change: on social media that's not instantly monetized. Well, 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. I want to go to Grand Prix Plaza.
That fan may tell their parents to start watching races.
Speaker Change: So I think that there are so many ways that we ultimately will monetize
Speaker Change: Sort of any of these points of contact that not every single point of contact that in itself has to be monetized.
Speaker Change: So with that, I will close the call for this quarter. I want to thank all of you on the call who has 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.
Thank you for your interest.
And that's all.