Q2 2025 TKO Group Holdings Inc Earnings Call

Good afternoon, thank you for joining us for the second causes 2025, TKO earnings call. My name is Kylie and I'll be coordinating the call today. If you'd like to register a question during the call, you can do. So by pressing star for the by 1, on your telephone keypad to be for yourself at 9. A questioning will be started by 2 at night, to handle the call over to our hostesses low senior, vice president, and head of the best of relations. The floor is yours.

Good afternoon and welcome to TKO second quarter 2025 earnings call.

A short while ago, we issued a press release, which you can view on our Investor Relations website.

A recording of This call will also be available via our website for at least 30 days.

After prepared remarks from Arya manual, TKO executive chair and chief executive officer and Andrew szwimer TKO. Chief Financial Officer will open the call for questions.

Mark Shapiro, our president and Chief Operating Officer and Andrew will be handling the Q&A.

The purpose of this call is to provide you with information regarding our second quarter, 2025 performance.

I want to remind everyone that the information discussed will include forward-looking statements and or projections that involve risks, uncertainties and assumptions.

Please see our filings with the Securities and Exchange Commission for further detail.

If these risks or uncertainties were to materialize or any assumptions proved incorrect, our results May differ materially from those expressed or implied on this call.

Forward-looking statements speak only as of the date. They are made and we undertake no obligation to update them in light of new information or future events. Except as legally required.

Our commentary today will also include non-gaap Financial measures which we believe provide an additional tool for investors to use in evaluating our ongoing operating results and trends.

These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with gaap.

Reconciliations between gaap and non-gaap. Metrics can be found in our press release issued today, as well as the information posted on our IR website.

With that, I'll now turn the call over to Ari.

Thanks, Seth.

Tkos momentum continued throughout the second quarter reflecting strong execution of our strategy. The quarter included multiple live event. Milestones enhanced event, economics and meaningful, new brand Partnerships.

These results highlight our ability to capitalize on sustained demand for premium content and Live Events to drive growth, profitability and margin expansion.

As just 1 example, the ESPN domestic media rights deal for WWE's premium Live Events announced. Just this morning. Secures a pivotal recurring Revenue stream for years to come

Content has become a key differentiator for organizations Brands and Platforms in search of audience from Netflix Live Events to YouTube clips and highlights. Our Global partnership with ab and Bev to our extraordinary. Consumer licensing, partnership with Fanatics our strategy and our assets at TKO are truly unique.

Given the continued momentum across our portfolio and our overall business Outlook. We are once again, raising our guidance, for the full year.

I'll now share some highlights from the quarter that underscore our positive momentum.

Turning first to our core UFC and WWE businesses, where Live Events and Global Partnerships continue to deliver solid performance and drive meaningful growth.

At UFC, in addition to setting a Reena records. Our Live Events are securing meaningful economic support from host cities. During the quarter 6, out of 8, live audience events, were supported by incentives, including a first ever fight night in Baku. Azerbaijan,

This event along with our recently announced visit Qatar partnership to host a fight in Doha. Highlights continued Traction in our site fee strategy, including generating greater support for our fight Nights from new destinations.

Meanwhile, our Global Brand Partnerships team delivered robust double-digit growth for UFC in the quarter, following recent major deals with Meta and Monster Energy.

This progress continues with a recent expansion of UFC's, Wingstop partnership, that will include additional Integrations across WWE premium Live Events over a multi-year period.

The properties are continuing to find meaningful Ways to Live side by side leveraging. The collective audience and fan avidity.

At WWE on the heels of a record WrestleMania 41, which was the highest grossing event, and most viewed WrestleMania, in company history money in the bank at Inuit dome. In Los Angeles, became the highest grossing, WWE arena event of all time a record. We've now, broken 3 times over the last year.

The strength of our premium Live Events was further on display last weekend at MetLife Stadium in New Jersey. Where WWE's first ever 2 night? SummerSlam. Drew more than 113,000 fans.

While premium live events remain a key driver, we're seeing enhanced economics across the entire event portfolio at WWE.

In the quarter, we set 36 individual Market records for ticket sales and sold out 16 events.

On the programming side, WWE's partnership with Netflix is showing robust appeal and growth across overall viewership, and the harder to reach younger demos.

Since launching on the platform in January, raw has appeared on Netflix's list of top 10 shows every single week. That's 30 straight weeks. Totaling more than 280 million View hours on the platform.

Internationally WWE's ples have been a consistent performer. Making the top 10 list in 37 countries. Over the first 6 months of the partnership,

Additionally with last week's Netflix premiere of WWE unreal. We are creating more opportunities for fans to engage with our ancillary content. In this instance, taking them behind the scenes, and into the writer's room for the very first time.

Across Global brand Partnerships. WWE generated remarkable growth in the quarter driven in particular by record setting deals surrounding several of our premium Live Events. We also renewed long-standing Partners including Slim Jim and expanded our roster in the financial services category with digital banking, platform chime

Turning next to IMG on location and PBR.

Img's, Global Production capabilities were on full display this quarter.

A singular high impact weekend. In May alone saw more than 1,000 IMG team members, across 3, continents, delivering thousands of hours of sports coverage for Marquee events including the final days of both the English Premier League and Saudi pro league Seasons. The Euro league final 4 in Abu Dhabi. Plus 15, MLS matches.

Taken together. These achievements collectively showcase img's unmatched scale in delivering world-class premium Sports, content to audiences worldwide from screens on phones, to screens on planes with sport 24.

Img's unrivaled capabilities were again on display last month at the 153rd. Open at Royal Port Rush where IMG supported our long-standing partner, the RNA to deliver a record-breaking Championship across attendance viewership and engagement from International media rights, and brand Partnerships to world first Innovations, like spidercam on the 18th hole. IMG helped Elevate The Fan Experience on site and worldwide.

Ality sales and reservations have already surpassed the entirety of Qatar 2022, Hospitality sales.

And at PBR, the 2025, unleashed the beast and Pendleton Whisky. Velocity tour, successfully concluded in May with record regular season attendance across, both tours.

The focus now, shifts to pbr's Camping World Team, Series debuting, with 2 additional Media Partners, Fox Nation, and the CW Network who joined cbs's coverage.

In closing, positive Trends continue across the business and we, are enthusiastic about key Milestones ahead with the UFC rights, renewal TKO promotion of the Canelo versus Crawford super fight next month, and the plan commencement of our share repurchase program in the third quarter.

We remain incredibly well positioned in today's sports ecosystem, due to the strong demand for our premium content and high contractual visibility.

As we move through the second half of 2025, our focus is clear, execute integrate and deliver on our updated guidance.

With that, I'll turn the call over to Andrew.

Good afternoon.

As AI highlighted, we delivered strong operating and financial results in the quarter. And for the second quarter in a row, have raised our expectations for performance for the remainder of the year.

UFC and WWE remain core drivers of TKO.

Both delivered record, quarterly revenue and adjusted Ava.

We're seeing significant strength of these businesses, particularly with respect to Live Events and Partnerships. And we continue to realize benefits to both the top and bottom line from the initiatives. We've implemented since the formation of the company.

Now, turning to our Consolidated Financial results for the second quarter, we generated revenue of 1.38 billion and increase of 10% adjusted Eva was 526 million and increased of 75%.

Our adjusted Eva margin was 40% an increase from 25% in the prior year period.

Our UFC segment generated revenue of 416 million and increase of 5%.

Adjusted Eva was 245 million and increase of 6%.

UFC's adjusted, Eva margin was 59%, consistent with the prior year period?

UFC had 11 total events, including 4, numbered events, and 2 international events. In both the second quarter of this year. And last year,

The mixed shifted slightly as 8 events had live audiences in the second quarter as compared to 7 last year.

Partnerships and marketing Revenue, increased 39% to 86 million.

The increase was driven by new Partnerships and partnership. Renewals we continue to make significant progress in this area. Add a new categories and growing existing ones, including recently announced deals with, Monster Energy and meta

Increasingly we're focused on Partnerships across multiple TKO. Properties. This initiative is gaining momentum most recently, demonstrated by the Wingstop agreement. We announced last week spanning UFC and WWE.

Live Events and Hospitality revenue decreased 15% to $59 million, as we previewed on our last call. The decrease reflected lower site fees. Revenue was driven by the timing and mix of international events; UFC held the Fight Night in Baku, Azerbaijan, in the quarter, while the second quarter of 2024 included a site fee related to UFC's first event held in Saudi Arabia.

Adjusted Eva reflected the increase in Revenue partially offset by an increase in expenses.

Direct operating expenses decrease, primarily due to lower production marketing athlete and other event-related costs.

Due to the mix of event cards, venues, and territories.

Sgna increased primarily due to higher personnel, and travel costs compared to the prior year period.

Our WWE segment generated revenue of 556 million and increase of 22%.

Adjusted Eva was 330 million and increase of 31%.

Adjusted even on margin was 59% up from 55% in the prior year period.

Live events in hospitality revenue increased 29% to $186 million. The increase was driven by higher ticket sales, with revenue reflecting an increase in average ticket price.

Total attendance declined as a result of our strategic decision to host fewer non-televised events. Cyphy revenue also increased as we received payments for both Night of Champions in Saudi Arabia and WrestleMania 41 in Las Vegas in the second quarter.

258 million driven by new Partnerships and renewals across multiple categories, including video games, travel food, and beverage Financial Services, Telecom and qsr among others.

As we discussed on our last call and driving much of the quarterly increase WrestleMania 41 set, an all-time record for Partnerships Revenue. More than double the previous record, the event featured a record, 28 total Partners, including a partner sponsor. For each of the 14 matches over the course of 2 nights, partnership, Revenue at WrestleMania and overall growth in Q2 showcases the execution on 1 of the core, tenants of our investment thesis.

Believe there's plenty of Runway to continue growing this important part of the business.

Meteorites production and content Revenue increased 7% to 279 million as we discussed on our last call results. Reflected the expansion of SmackDown to a 3-hour format for the first half of the Year, resulting in a shift in quarterly, Revenue recognition.

The increase was also driven by the contractual escalation of meteorites fees, including our long-term, Global agreement with Netflix.

Adjusted. Evida reflected the increase in Revenue partially offset by an increase in expenses. Direct operating expenses increased primarily due to higher production and talent related costs.

Sgna increased primarily due to higher personnel, and travel costs compared to the prior year period.

our IMG segment generated revenue of 307 million in the quarter, a decrease of 4%,

Adjusted EBITDA was $29 million, an increase of $120 million.

Adjusting ibida, margin was 9% up from -29 in the prior year period.

The decline in Revenue, primarily related to IMG no longer having rights to the FA Cup.

This was partially offset by revenue from new production agreements, including a multi-year deal with the Saudi pro league.

Adjusted Eva largely reflected a decrease in expenses, partially offset by the decrease in Revenue, the decrease in direct operating expenses, principally reflected the absence of the right down of unsold tickets at on location. For the 2024, Paris Olympics, as well, as lower media rights fees at IMG associated with the FA Cup.

Sgna decreased primarily due to lower Olympics related costs at on location.

Corporate and other generated revenue of 45 million and increase of 9%.

Adjusted eval is -77 million and improvement from -91 million in the prior year period.

The increase in revenue is driven by management fees from zuffa boxing. The JV we announced earlier in the year

Adjusted evaa Improvement was primarily due to a decrease of 24 million of costs related to corporate allocations of endeavor corporate expenses under their ownership of IMG on location in PBR.

As we discussed on our last call, from the close of the acquisition on February. 28th forward. There are no Endeavor, corporate expense allocations

Now, moving on to our capital structure.

In the second quarter of the year, we generated 375 million of free cash flow.

Our free cash flow conversion of adjusted. EBA was 71%.

Free cash flow in the second quarter included. The adverse impact of the third and final 125 million payment related to the UFC Anti-Trust settlement, as well as the favorable impact of approximately 165 million of prepayments related to allocation for the 2026 FIFA World Cup.

On June 30th. We made our second quarterly, cash dividend payment from TKO opco on approximately 75 million.

We ended the quarter with 2.769 billion in debt and 535 million in cash and cash equivalents in addition to 323 million of restricted cash.

Regarding our 2 billion dollar, share of purchase program, we continue to expect. We will commence activity in the third quarter of 2025 with our timing and Quantum, ultimately subject to market conditions and related factors.

We remain committed to a robust and sustainable Capital return program. That balances return of capital to shareholders with Organic investment and maintaining our strong balance sheet.

As for boxing, we continue to operationalize. The JV we announced in March and intend to hold our first event in early 2026.

Separately in June, we announced that we will promote the Canelo Alvarez Terence Crawford fight taking place on September 13th. In Las Vegas.

we'll provide further, updates on our boxing activities as and when appropriate

Now, turning to our Outlook as we've discussed in the past, we managed the business with a focus on full year performance.

Therefore, we believe results are best evaluated on a full year basis. Giving the quarterly fluctuations that are inherent in our operations.

We are now targeting revenue of 4.63 to 4.69 billion and adjusted. Eva Dove 1.54 to 1.56 billion, an increase of 135 million and 40 million respectively, at the midpoint of the ranges as compared to the prior guidance. We issued in May

The increase is related primarily to strong operating performance at UFC and WWE through the first 6 months of the year and our anticipated performance for the remainder of the year.

It also reflects continued progress on the integration of IMG on location and PBR.

To date. We've achieved our 2025 Target of 15 million of in-ear savings representing. 25 million on our run rate basis and we remain on Pace for a run rate of approximately 40 million dollars by year end 2026.

In terms of free cash flow.

While we have not given formal guidance, our view remains unchanged.

We continue to Target a full year. 2025 free cash flow conversion rate. In excess of 60%,

As we've discussed on prior calls, this excludes the impact of approximately 300 million of non-recurring amounts, as well as the benefit of any restricted, cash related to the 2026 FIFA World Cup.

On our last call, we highlighted a few notable items that we expected to occur in the second quarter, and our results were consistent with all of them.

As with our prior calls, while we are not providing quarterly guidance, we want to highlight a few notable drivers of our expected performance. As we look into the third quarter,

At UFC. The third quarter is expected to include 10 events which is comparable with the prior year period. However, Within These 10 we expect 2 numbered events, our fewest in any quarter this year compared to 3 in the prior year period.

further, we intend to Stage 8 events, with live audiences compared to 6 in the third quarter of 2024

Despite strong underlying Trends to the timing of the calendar is expected to meaningfully impact. Our largest revenue streams, meteorites Live Events and Partnerships. As a reminder, UFC 306 was held at sphere in the third quarter of 2024

This event was the highest grossing gate in UFC history and also included a title partner, sponsor for the first time.

With respect to expenses as we've discussed we incurred meaningfully higher than normal production costs for UFC 306 that said an event of this magnitude is not expected to occur in the second half of 2025.

At WWE, the current calendar includes 3 main roster premium live events which is comparable to the third quarter of last year.

However, the expansion of SummerSlam to 2, Knights is expected to favorably impact multiple revenue streams including meteorites, Live Events and Partnerships.

As we've previously, discussed Smackdown format will revert to 2 hours beginning in the third quarter and while there is no impact on the full year, the change will adversely impact meteorites Revenue recorded in the quarter.

At the IMG segment. We expect third quarter, revenue, and adjusted, evida to increase quarter of a quarter in terms of absolute dollars as our results are expected to reflect the impact of a number of signature tennis. And golf events, including Wimbledon the US, Open the British Open, and the Ryder Cup.

IMG and on location will also be performing services in connection with the Canelo versus Crawford event, which is expected to favorably, impact our performance.

At corporate and other adjusted evida is expected to improve modestly quarter over quarter primarily due to the benefit from the services fee related to Canelo versus Crawford.

With regard to our WWE deal with ESPN announced earlier today. The agreement is 5 years in duration and we expect to recognize Revenue in line with sports media rights industry, standard, annual escalators,

Has already touched on earlier this deal is further evidence of the value of our core IP and we are excited about the potential impact of ancillary revenue streams. We can generate from the halo effect created by the Disney ESPN ecosystem.

In conclusion, we generated strong second quarter results, that reflect continued momentum across our businesses in particular, UFC and WWE.

While we still have a lot of work. Ahead of us, we are extremely excited about our prospects for the remainder of the year and Beyond

With that. I'll turn it back to Seth.

Thanks Andrew operator. We're ready to open the call for questions.

Thank you very much. We don't have to open the lines for Q&A. If you'd like to ask a question, please signal by pressing star, followed by 1 and go to the phone keypad now. And if you'd like to remove yourself from the line of questioning, we'll be staffed with it by 2 as a reminder, to raise a question. We'll be staffed with up by 1.

Our first question comes from Ben Swimmer from Morgan Stanley. Ben, your line is not open.

Was just making about sort of the halo effect.

I can remember you guys went from, you know, the WWE Network to Peacock and now moving to ESPN, if you think about how the polls have performed on peacock and how that's impacted, you know, the value of those rights and those assets and then think about what will happen with ESPN. Can you talk about what you think the big changes opportunities impact will be and I know you can't answer for Netflix but I guess I'm a little surprised to see them. Not pick up these rights you know given they have them everywhere else.

I guess from a TKO point of view, you know, what's your perspective on? You know, having multiple partners for these rights in different regions versus, you know, bringing them to, to 1 platform. Thanks a lot.

Thanks Ben. First off, I think we've been consistent in our in our messaging to you that we were always a little reticent about having all of our eggs in 1 basket. Don't get me wrong. When you're doing these deals, you're balancing monetization, right? Of the asset and the opportunity with, of course, reach with regard, to our brand in our audience. So you know, that's certainly played a factor when we have went into the market. At roughly the same time, we began talking interested parties on the UFC, we have strong interests because more than anything else. These are monthly big events, right? And and we're now frankly living in the big event Eric, you know, era if you will. You've heard xandos and Bella beeria in specific, uh, in

Particular talk about this big events. Looking for big events, not volume. Not necessarily weekly. Certainly not daily, but big events. So I would just tell you, when, when all was said and done, we could have actually had a slightly higher right fee by going with another partner. But we thought the strength of ESPN's brand, the reach, the platform, the makeup of Their audience, and their D to C strategy, which is launching soon. Here was just as important as the dollars and we've been consistent with our approach in that messaging to you. Ultimately, we're sitting here with a 5-year deal, annual escalators high margin Revenue stream with attractive visibility and stability.

The Slate of programming that are the ples and, you know, Nick Khan and Triple H has done such an amazing job. Taking the Baton from Vince McMahon. These ples are purpose-built for direct to consumer services. We will stream all 10. PS over the course of the Year powered at times by linear and I want to underscore that it's that that could get lost in the messaging. The idea of having

A Money in the Bank of SummerSlam, a Russell Mania. Take your pick from our ples

With the first hour or even 2, cemo cast.

On ESPN linear and the D to C with a handoff to their direct to consumer.

You, you just can't beat that proposition and of course, that's driven by the fact that ESPN's linear platformer. It's absolutely unmatched in the industry on the ESPN side. You know, they saw this as big audience content that travels to any platform. It's a very loyal audience. They were firm in a group that both WWE and the UFC content for that matter. Attracts new Subs attracts cord, never is very important. Those folks that have never those young folks that have never signed up to cable or satellites. They are streamers from from birth. If you will

They saw that with our content and they also knew we were the antidote to churn and of course that track record with UFC and what we built at ESPN, plus played into our favor in terms of what we are getting in return. Beyond the math that you've seen, which is a, a clear step up from what we were getting 900 million aab in our last deal to now

3, Excuse Me, 1.625 overall for the deal in 5 years. You know, it's a 1.81 step up and I want to have Andrew walk through the math of that for a second and also hit your your last point. Which is what are the what are you getting beyond that? Like what are the ads that we should be looking for? Which we see as further monetization opportunities?

223 242 the right fee has been just under 190 million and for sub 26. Uh given the fact that there's a short period of time, through March of 26, it's just under 50 million. So all of this Aggregates to Mark's point of 900 million dollars of total right speed over the 5 years or an aav of 180 million, what's included in the peacock deal of 180 million that actually is not included in the ESPN deal. IE what we've retained for further. Monetization are all of the NXT ples roughly 6 per year, 250 hours of original programming. That historically had been in WWE WWE's cost and expense that we no longer have an obligation to produce contractually, 5 documentaries, over the term 1 per year at WWE's cost and expense, which we no longer have the obligation to produce contractually as well as

The content archive, so meaningful opportunity, for additional monetization on top of the 325 and Ben there's fewer reasons for 1 second. I know it's a long answer but we're trying to cover a lot of ground. I think another subset of your question.

You know what made us feel. Okay, walking away from Netflix. Um, and and by the way, I'm not suggesting they made any offer at any level, but of course, they are a great partner. And to your point, they have all of our content

for the most part, the rest of the world outside of SmackDown. Why wouldn't they have it here? The ESPN proposition. And whether our audience would travel was important to us and I think Nick is best suited to talk about how our audience has traveled and why that gave us. I, I would say firm confidence that we were going to be able to build off what we currently have. Nick, thanks Mark a number of different examples of the WW audience. For example, uh, during the last or 2 Winter Olympics ago, we were notified on short. Notice that we'd be moving Monday night raw at the time. From USA Network to sci-fi, maybe it was 1 or 2 weeks of notice, uh, 96% of that audience traveled to sci-fi, which with all respect to to USA and how great it is sci-fi, not necessarily a destination network. If you look at WWE Network, which at its peak in the United States at 1.1 million subscribers, but we went to Peacock,

Each and every 1 of those travel plus the subscriber base for peacock. Um, that was there exclusively for WWE grew massively. If you take a look at that, and what we think we can do with ESPN and its DBC. It should grow even further. Our audience, always travels,

Thanks Nick.

Back to you been. That's very helpful. Thanks guys. Appreciate it.

Thank you.

Thank you very much. Our next question comes from Brandon Ross from light shed, Brandon, your line is now open.

Uh thanks for taking the class since I guess. Um moving from the WWE ple to UFC uh we're surprised that you announced that ple deal before UFC were you just waiting for Paramount sky dance to close or another external event or is the UFC deal proving to be more challenging um than the ple deal was. And I I guess you suggested you were looking at your partner's holistically or as a as a portfolio in your answer to Ben should we know assume ESPN?

With um, WWE until is less likely to continue on with USC.

And on the flip side as you, you know suggested you walked away from Netflix. Are they more likely as a UFC partner?

Thank you, Brandon.

I will try to hit all those parts there if we leave anything out, you can come back around. Uh the first that I that triggered me was the

was the was it more challenging for the UFC? Have we found that to be more challenging than we initially? Thought the answer is unequivocally. No.

And I'll leave it at that.

As far as the timing goes.

frankly, we've been in the market with

essentially 5 properties at the same time.

The UFC, which could be.

And then you have PVR, which, as you know, Dr. Phil went belly up and Marriage Street went belly up as part of that. We were left holding the bag with a contract of approximately $181 million over four years that we've had to try to find a new home for PBR. So we were definitely disadvantaged. We've been in the market really with all five.

Where they come how they slot when they sequence.

That just happens to be where we are in terms of, uh, the state of each of the deals. In each of the conversations, what I can tell you on the UFC is we are in the home stretch, we will provide an update on the UFC rights when we have something to announce.

Our mission remains finding a balance between maximizing monetization, and reach. And as evidenced by our WWE plzz, ESPN deal. The market for premium content, especially big event, programming remains strong, and it will remain strong with ESPN as well.

okay, and the other part of that was

To the outcomes of each of these deals that you have in the marketplace influence, each other, such that WWE would now be and it's our UFC would be less likely to do a deal with ESPN or if they mutually exclusive.

I mean that's more of a question for, you know, Jimmy vitaro and

And Bob, on the Disney call, I do know that Jimmy was quoted yesterday. When asked about this specifically in the trades, he relishes the relationship with TKO. He specifically pointed to the success they've had with UFC and what that did for ESPN+. He mentioned what they believe that WWE can do for their strategy going forward, and I don't think it will rule them out - his words.

Thank you.

Thank you Brandon. Thank you very much. Our next question comes from David, uh, konovsky from JP Morgan, David. Your line is now open.

All right, thanks um Mark sorry just um, on the non pole content. Um, you know, while I hold that back and maybe to the point Ben was trying to make, um, you know, is it is, it is a thought there that maybe that belongs with 1 of your existing partners.

Uh, well, the answer there, David is simply more modernization opportunities. Like our our goal here is to increase profitability.

Increased margins.

Get to Industry great. Uh excuse me, investment grade.

and,

We're we're margin to that beat and so, you know, we're cutting a deal and it's not just about the actual rights fees here. It's about

All the bells and whistles and in in between and those bells and whistles add up from an ancillary perspective. So to answer this point, you know, if we can have Nick Khan go to the market and sell NXT ples for incremental right fees. Fantastic. We no longer have to produce 250 hours of original programming annually. That's a lot of bandwidth and it's a lot of cost we can take out fee documentaries over the term contractually. We certainly want to do films and documentaries and WWWE. Our production arm there has proven to be very successful in delivering uh, docs that are critically. Acclaimed and and and highly viewed. But we want to go out and sell those 1 by 1 and maximize the market and timing. And of course, when it comes to our library and our archive,

We're going to maximize that opportunity as well. So not every deal is created equal and not just because something was in the last deal will mean it's in the next deal and vice versa.

David. The only thing I'd add and and I did allude to this in my prepared remarks with regard to the halo effect when you look at usds at sales and Partnerships business and the benefits and step function change. We saw in that business when we moved from Fox to ESPN and the current trajectory we are now on with WWE. The halo effect of Netflix albeit internationally for the polls and raw here. Domestically, we do believe that this deal will yield meaningful benefits for us on Partnerships. And then, over time Live Events and uh, site fees as well.

And David just 1 of the things. Go ahead Mark. Yeah great and then we'll give you another another.

Point there.

Is letting Andrew raises the idea of getting add inventory. In our deals going forward is extremely important to us. We have an

Glass.

Global Partnerships division that is.

on the

uh, cost of

hitting million dollars.

Of you would see a loan on a global Partnerships before you even get to WWE. And we've talked about that publicly, the idea of tying, some of these partnership deals where we have in Arena sponsorship, we have intellects broadcast integration and now going out and actually selling inventory, add inventory. We've done some of that with our UFC pay-per-views, but for the most part, that's not our business to now, open that door with these WWE, ples and have the opportunity to sell ad inventory, in these ESPN deals, that's a game-changer for us. And that's also something that's important to us in any UFC deal going forward.

Mark maybe just to follow up on the reach Point, regarding the ESPN platform, I just want to understand better your point of view because

You know, the linear Subs are going to have a DTC entitlement and that will give you um, reach right away. But the obviously the Standalone price is a bit above peacocks. I just want to understand also your considerations there for that kind of core never set up your offense. Thanks.

Yeah. Look, we thank you. We, we've been down this road before. I mean just as, as a reminder, to everybody on the call here, when we signed up with ESPN,

And ESPN Plus for the numbered event to pay for views.

That.

Proposition.

Saw us launching in 3 million homes.

So ESPN plus was in 34 million homes early on. In fact, we had problems with some of our Partnerships because they were coming back saying

We're not being seen by anybody. We thought we were going to be have a big audience and now ESPN plus is so small. You know, should we be talking about a haircut on our our right fees? If you will what they were paying us, of course we didn't give them any of those. We figure out other inventory to make them good and make them happy. And by the way, ESPN plus grew fast, but that proposition was a double pay law. You have to sign up for ESPN plus which is a monthly hit grant that it was in 2999 but still a monthly hit which is gone up. And then the pay for the pay-per-view, which is substantially more than the 29.99. You're going to have to be paying here on the PLS to get the DDC offering. I mean, it started in the 50s and you know, it was up closer to 800 by the time it was

Added with the monthly cost of yes, Cam plus. I mean, it it really that that was, that was a tough barrier to get across for our fans and frankly something that

Generally made them unhappy.

Still we succeeded. This has been a a monster success with UFC and ESPN plus so as we looked at this opportunity even though they'll be starting small and even though DTC is 29.99,

Their ability to authenticate.

And and have the platform immediately because they were tailored or satellite.

Player or you know, those core Nevers getting those folks in first 29 and 9. If is a a big time discount price compared to what they were paying for UFC pay-per-views so we're not we're not concerned about that whatsoever.

Operator, let's take our next question.

Thank you very much. Our next question comes from. Stephen leski from Goldman Sachs. Stephen, your line is now open.

Hey guys, thanks for taking the question. Um, maybe on the the 25th for Andrew, it sounds like UFC and WWE outperforming here in internal expectations going into the first 6 months of the year, which is just curious to see you talk a little bit more about what areas. Uh, specifically are driving some of that outperformance versus your expectations and then what extent you expect from that number.

And the carry on into the the back half of the year, or if you think there's other puts or cakes we should be. Considering as we look into the, the final 6 months, as being factoring to the, the guy that you gave today updated guide.

Yeah. I think uh and thanks Stephen. As as I said in my prepared remarks, you know, both these powerhouses continue to outperform our internal expectations and uh external expectations need to be, you know, Market consensus.

From an event basis for Q3 and with our full year numbers, you can, you know, very easily get a sense of what then Q4 could look like. So, uh, year to date is the story about Live Events and Partnerships. We anticipate those Tailwinds to continue over the course of the year. We gave you some color on sort of mix for 2 3, uh, and obviously taking up Top Line 135 million at the midpoint and adjust and even, uh, 40 million at the midpoint maintaining a, 33% aggregate margin. Um, we feel very good about the status of our business, 2 things I will note and Mark and I spend a lot of time with the team talking about margins.

Q2 UFC 59% operating margins flat year-over-year. Uh, but very, very strong from performance perspective but all eyes on WWE here 59%, operating margins at WWE driven largely by WrestleMania and the success of that event. But when we set out on this journey to talk about operating margins at WWE close closing in to UFC and even being above that 50%, Mark, you know, we feel real good about it. Uh, we believe that sustainable over time, uh, particularly uh, in light of this deal that we did this morning. Uh, so this is as much about margin accretion as it is, anything else.

Our our SummerSlam Stephen was the most viewed we've ever had in the history so quickly that is turning into another WrestleMania for us and the more that that Nick and and Paul can drive these events to be of that ilk and that level and deliver the kind of results on on Live Events and site fees that we get for Wrestlemania.

That's what that's what's going to get us. The rest of the way there on the margin increasing.

That that's all helpful, maybe if you could just follow up and and dig in on the WWE side sponsorship, it's been a massive opportunity. You guys have executed well and that the, you know, the side Nick. I'm I'm curious if you're still on.

The opportunity going forward just to keep executing against that. Maybe, as you look further down past the PLS, how should we think about the pace of execution on on the sponsorship opportunity?

It is.

One of the highest priorities at WWE, and at TKO Market mentioned earlier, is the strength of our Global Partnerships group and the number of global partnership dollars that UFC is now generating with WWE.

Uh, paying family-friendly programming with 50% of our live audience, bringing a child with almost 40% of our audience live watching. Uh, the women, uh, we think there are significant rooms for significant room, pardon me to continue to increase in those sponsorship dollars.

Again, it's a priority we think in shifting over to ESPN C2C, it will help that further and uh, sky's the limit.

Remember any AD inventory that we get any deals would go towards?

Our partnership goals.

Uh, and I will tell you, you know, Nick and Andrew can assess.

This it's almost fun selling the WWE. I mean this is this was a blank canvas when we walked into this. It's not

You know, we said publicly that we we're putting 375 as our goal for the 2, the 2 entities for the year and going out and selling. Whether it's the Matt, in Arena in the concourses, uh, integration some of our Hospitality packages have sponsorship in it. I mean, this is all like fertile ground for us. So we're, uh, extremely encouraged and optimistic about what we can do with WWE. Given the strength of what Grant Norris Jones team has built and succeeded in doing at the UFC.

Thank you guys.

Thank you.

Thank you very much. Our next question comes from Peter Suba from Wolfe Research. Peter, your line is now open.

Obviously, you're not going to give us multi-year Revenue guidance here. But if you could talk about the attributes of this company beyond the media rights, uh, in 26 that you think are worth focusing on. Thank you.

Yeah, let's start by uh, handing out the multi-year road. No, I'm just kidding. Andrew, go ahead. Well, thank thanks for the question Peter. I think, you know, clearly a strong story through the first half of the year. Um, I did again, I'll I'll refer back to my prepared remarks in terms of mix, uh, in terms of balance of your number of events in terms of, uh, headwinds. These are the, a 2-hour format change for Smackdown in the bat half of the year, um, and on a comparable basis, you know, the lack of events such as USC, 306 at this year, uh, which occurred on a prior year basis. So while we still anticipate growth on these high margin contributors, uh, when you think about the full year, which is how we've articulated the best way to look at our business, very strong H1. Uh, we articulated event shifts and mixed shifts from a calendar perspective for Q3. Uh, and then, you know, some of the Tailwinds that we had in 24 of these, are the, you know, event type event quality.

Are not necessarily recurring I will tell you that. Uh when we set out we did guide that we would only be doing 1 Saudi ple for this year uh that shifted to 2026 which does you know clearly it's a contribution of reiterate. When we gave our initial guide uh is roughly 200 basis points of contribution to overall annual margin uh that obviously would be a 26 benefit, but adversely impacts 2025. So when we think about the year holistically,

We're we're very comfortable and confident with the pace and when I talk about Tailwind, we talk about long-term Tailwinds, we're not seeing things slowing down in the conversations on site fees. We're not seeing Global Partnerships conversations, slow down at some point. Uh, you start thinking about Contracting revenue for going into 26 and Grant and it's feeding our squarely focused on setting up 26 for as big a year as we're having in 2025.

Great. And then, uh, Peter just on the

M&a or other investment opportunities.

You know obviously I don't want to get ahead of myself. I mean we're the ink is barely dry and the WWE ple deal with ESPN and and we're still out in the marketplace.

on a host of other, uh, renewals, as I, uh, affirmation

I would say that.

first and foremost, our primary focus is continuing to drive value at UFC and WWE across our multitude of revenue streams that are sitting

front and center.

So, as we need to remain laser focused on the integration of IMG on location and PBR, both extracting costs and creating new Revenue opportunities. As you know, we're, we're ahead of our guidance on those Synergy opportunities, but we still have a lot of work to do.

Number 3. Further capitalizing on the Netflix momentum, was raw his front and center for us. You heard Ari rattle off some of those stats and is prepared remarks. I mean we don't we don't take it lightly but we're proud of the success we have and it's very clear. We are now a top tier property

for the Netflix platform.

The launch of the WWE ple is on ESPN that first event.

Has to be.

The field of a Super Bowl.

And that works well since ESPN is getting ready for their first Super Bowl.

So we we expect to have that kind of treatment when you see Wrestlemania on ESPN, let alone the very first launch event which of course. Netflix did an amazing job of when we first launched raw and had our first event there to your point. Cko has a strong balance sheet and attractive Financial profile. Uh, we

Major sports asset for TKO and shareholders. And then, of course, Ari Emanuel

I say.

And WWE.

Doesn't happen without Ariel Emanuel driving that he's a significant value creator, and he spends a lot of time out there leveraging his relationships on what's around the corner that might fit.

Of course, has to be created and we have to be prudent and he purchased but might fit squarely into our Sports. Pure Play model.

Thank you very much.

Thank you, operator 1 last question. Of course. Thank you so much. Our next question comes from Ryan Gravette from UBS Ryan. Your line is now open

Great thanks. Um, Mark you, you just touched on this briefly but I was wondering if you could provide more of an update on how the boxing initiative is is progressing. Especially with

Some of the new legislation being proposed. Um, and then Andrew, you give some color on the financial impact this year. But, but how should we think about, um, that Financial contribution as we go into 2026?

Great. Thank you, Ryan. I will uh, I'll touch on the business and there's some, there's some Salient updates here.

And I'll get into those and then I will turn it over uh, to Lawrence Epstein. Uh, who is working on the uh, Muhammad Ali American?

Boxing reformat Revival act and um he's rolling up his sleeve getting ready right now. So, uh, first off I, you know, look we think boxing is an attractive growth opportunity for TKO. We believe We will deliver significant long-term value for our shareholders. And, as I mentioned this, this unequivocally will be a fourth 10 pole, Sports asset for TKO. I mean, we are going all in here.

Nothing like two gladiators going toe to toe to sell since the beginning of time that never gets old. And so boxing has the same power that it has. The interest is multi-generational both in the U.S. and internationally. We're excited about our new joint venture, formerly titled Zuppa Boxing, which we launched with Saudi-based, Sellup, and announced in early March. This is low-risk, and TKO receives a roughly $10 million fee for serving as the managing partner and providing day-to-day operational management oversight, and that's all margin for us.

TKO has no funding obligation. Additionally, outside of the Jay-Z wholly separate. We will look to deliver 2 to 3 super fights per year, similar to the Canelo, Crawford fight that

Uh the Saudis of course Nikon and Dana White had helped us put together for September. Las Vegas again. No risk to us on that deal. We get a fee to promote it.

Each one of these supervised events generates a fee for us to negotiate the media rights for each fight, which IMG manages. We're proud to have brought IMG into the fold of our flywheel. We also receive a fee for being on location to sell hospitality packages, and we will feature Zuppa boxing fighters on the undercard of each of these super fights. We expect to net on average.

Another 10 million.

For every super fight, we manage and promote.

And I would just say 1 last note, you know, we've had significant interest from several domestic linear and D to C platforms with regard to the media rights for our Zuppa. Boxing promotion that will launch in the first quarter of next year and we are in the home, stretch of those negotiations and believe, we will have something to announce soon. Now with regards to the Muhammad, Ali Act and the reform that's going on there. I know there's

UFC sour unified uh, organization, uh, for uh, the promotion of boxing events. Uh this is going to provide more choice for athletes uh in the boxing space. And uh, we are very optimistic that this legislation uh will move relatively quickly through first House Representatives. And then, of course, the Senate and uh, and become law. We're hopeful in the relatively near future.

And then I'm just, you know, Mark alluded to some of the financial aspects of boxing. I will say that over time as and when we're successful, we will have an interest in a venture that we anticipate, you know, with our

Blood, Sweat and Tears will create meaningful firm value.

That will ignore to the benefit of our shareholders as well. So not only will, we be flipping cash management fees for our services at the JV for our participation is promoter? And these, um, you know, super fights. We're also going to increase value by virtue of an ownership position in the Detroit Country,

and we'll close Ryan by just telling you, you know, we're

Competitors, partners, suitors—see what we're doing every day to track our traction. They see the way the WWE and UFC are growing, and frankly, PBR's on a great run right now too. We get all kinds of incoming calls.

I mean, we got a nice pitch this week to a JV and highlight. They're trying to bring highlight back in Miami. We have passed on that opportunity, but it just shows you the kind of opportunities that are knocking on our door.

Thank you, everyone. All right, on that note, thanks everyone for joining us on today's call. Operator, you can conclude the call.

As we conclude today's call, we'd like to thank everyone for joining, even though disconnect your lines.