TKO earnings call transcript, November 4, 2026

Andrew Schleimer, TKO's Chief Financial Officer. After prepared remarks from Mark and Andrew, we'll open the call for questions. As a reminder, we will be making forward looking statements. These statements are subject to. Risks and uncertainties that could cause actual results to differ. Our remarks will also include non-GAAP financial measures. Reconciliations of these measures to GAAP measures can be found in our press release as well. on our IR website. With that, I'll now turn the call over to Mark.

The third quarter is more validation of the live experience secular tailwinds powering TKO. Our company sits squarely at the intersection of premium sports, live events and experiential hospitality across multiple businesses at scale and worldwide. And as AI makes live content. And shared experiences even more valuable, our tailwinds become more fierce. The media landscape is also shifting in our favor. The paramount combination with Warner Brothers Discovery is an industry defining moment. And TKO stands to benefit. Paramount Plus is our primary partner across UFC and Zufa boxing. And the addition of TNT Sports and HBO, once called the heart and soul of boxing, under the Sky Dan Summer. Umbrella sets the table for more reach, increased engagement, and significantly more scale. As investors, you should be bullish about what this means for TKO. Our business is... And our fundamentals are firm. The vast majority of our existing revenues are locked in for the next five to seven years. Macro trends are in our favor. Every facet of sports consumption is pointing north. And there is no ceiling. Turning specifically to our third quarter performance, at UFC, every single event held outside the meta apex sold out. Not most of them. All of them. UFC 329 at T-Mobile Arena in Las Vegas was the highest grossing event in UFC history with a $26 million gate headlined by the long awaited return of Conor McGregor to the octagon.

We drove nearly 16 million viewers to Paramount Plus, peaking at 8.3 million concurrent streams, a record-breaking audience on the platform. Conor McGregor is rehabbing now and insists he will be back. In 2027, UFC 330 set the record for the highest-grossing event ever held at Xfinity Mobile Arena in Philadelphia, while UFC 331 set the same record. At Crypto.com Arena in Los Angeles. Ten sellouts and seven arena records spanning five countries in just a single quarter. All told, UFC... Live events revenue is up north of 80% this quarter over the prior year. On the marketing front, UFC's global partnerships grew significantly in the quarter, with new deals and activations in categories. Spanning technology and AI, gaming, crypto, financial services, alcoholic and non-alcoholic beverages, television and film releases, and automotive. UFC is white hot, and advertisers want to get in front of our audience, specifically our hard-to-reach demos. Recall that 46% of the UFC audience is in the demo. Of 18 to 34. Now that we are in the market selling traditional commercial ad inventory for UFC under our Skydance deal and for WWE with ESPN, we are capitalizing on our audience makeup. And are increasingly optimistic about the medium and long term financial contribution, both on a standalone basis and as part of fully integrated partnership packages. As I said in September, we plan to provide more color.

And revisit our TKO wide global partnerships forecast at Investor Day, which will be held in Q1 date forthcoming. Zeroing in on our financial incentive packages or FIPs for short, the demand. From public and private partners who value our events as cultural and economic catalysts is real. And it is growing. Internationally, our debut in Serbia, backed by an FIP. Became the highest grossing event in Belgrade Arena history. And Noche UFC in Glendale, part of our new multi-year multi-event and multi-property FIP partnership with Arizona. Sports and Events Alliance and Legends Global became the highest grossing domestic fight night in UFC history. Later this month, UFC returns to Doha in partnership with Visit Qatar and the pipeline into 2020. 27 FIP growth is expanding. Pivoting to WWE, Ari and I are having flashbacks to 2019, when it was three years into our acquisition of UFC, and we're seeing almost a mirror. image of that momentum. In terms of audience, Raw on Netflix had another exceptional quarter, spending 12 of 13 weeks on the top 10 list of most viewed shows on the platform globally. On September 14th alone, Raw charted in the top 10 in 24 countries, the widest reach since the show debuted in January 2025. And in October, all W... WWE programming launched on Netflix in Japan, a market that has consistently demonstrated demand for our content and live events. And this will serve to embolden our strategic initiatives across all...

...of Asia. To further put this into perspective, domestically, our Sunday night's main event on September 6th sold out State Farm Arena in Atlanta, Georgia, WWE's highest-grossing... ...non-PLE event across more than 20 visits to the city over the last 10 years. And we are just scratching the surface of what WWE can generate as we leverage our market intelligence... ...data, and analytics to improve both ticket yields and ticket volumes. Just as we did in the early years with UFC, which set the stage for a compounding growth that we are still realizing today. The same theme applies to global partnerships. The categories are expanding at a rapid pace, just as they did when UFC began to heat up. Tech, crypto, gaming, QSR, television and film releases, CPG, and automotive. WWE's global partnerships delivered a strong third quarter, up approximately 30% over last year, despite a significantly lighter event calendar with only one premium live event. Versus four in the prior year quarter. Summerslam became the third highest grossing PLE by partnership revenue in company history, behind only WrestleMania 41 and WrestleMania 42. Proof of... WWE's growing cultural and commercial relevance. We are on track to close the full year, up more than 20%, as I said at the Goldman Conference in September. That implies approximately 50% growth. In Q4 alone. UFC and WWE are seeing growth from every corner. And this in spite of macroeconomic pressure and geopolitical risk. We're playing the long game, prioritizing.

Creative, finding new revenue streams, and serving as marketing engines for the world's biggest brands. As just one example, WWE's partnership with the Walt Disney Company is expanding once again. This past Monday. In front of a sold-out audience for Raw at the Barclays Center in Brooklyn, John Cena announced the first-ever John Cena Classic, which will feature the biggest names on WWE's main roster. from Raw and SmackDown up against the brightest future superstars from NXT. The event will take place at ESPN Y World of Sports Complex at Walt Disney World Resort Orlando on December 14th. WWE, Disney, and Fanatics will simultaneously stage WWE World, further festivalizing the fan experience and helping promote a major Disney holiday tentpole, Avengers Doomsday. Now let's talk about why our confidence extends to the rest of our portfolio. At On Location, the 2026 FIFA World Cup meaningfully exceeded our plan. When all was said and done, the FIFA World Cup... ...hospitality program delivered $2.4 billion in total hospitality sales, with the final match alone generating nearly $500 million. More than 640,000 packages were sold. ...across 16 host cities. The World Cup put on-location's capabilities on the biggest stage in the world, and confirmed what we've been saying. Premium experiences are in demand, way bigger than... ...beyond the 1%ers who historically chase these experiences. And our success at both the Milan Olympic Games and the FIFA World Cup has charged our CRM database and positions us to continue to meaningful...

...capitalize on our internal forecast for both Super Bowl 61 in Los Angeles and the LA 28 Olympic Games. In fact, we are tracking ahead of plan on LA 28. Speaking of the Olympic Games, I should mention that while we are currently evaluating a partnership with the IOC on the French Alps, Brisbane, and the Salt Lake City-Utah Games, we continue to demonstrate financial discipline. And we'll only proceed if the return profile meets our internal thresholds, similar to our FIFA World Cup strategy. Let's talk about IMG for a minute. What we never want lost on our investors. Is the role IMG plays in our sports and entertainment ecosystem. The strategic importance of IMG across industry relationships, our advisory business, production for hire work, and distribution capabilities. Is industry leading across the globe. Keep in mind, especially for those newer to the story, our business at its core is live events and experiences. And our fans are at the epicenter of everything. We do as we grow revenue streams across the board, having a business like IMG, an industry leader since 1960, in all the spaces we play is invaluable. It provides. Unique influence and leverage. Throughout Q3, IMG played a central role in driving our global partnerships and our FIP growth at UFC and WWE. This, in addition to driving global partners. For our unmatched portfolio of external partners, such as the RNA and Wimbledon, our worldwide reach with 35 offices globally and boots on the ground selling into 100.

150 countries simply has no peer. The more we train and improve communication, collaboration, and integration internally across TKO, the better the results. Ari and I spend an extraordinary amount of time fostering this culture. Some of the developments I'm most excited about in this past quarter at IMG include its appointment by the WTA as production partner in a multi-year agreement. Spanning more than 50 tour events per season, including the WTA finals, which will be held this year at Indian Wells for the first time ever. And topping that last month, Netflix named IMG. As the production partner for its coverage of the FIFA Women's World Cup Brazil in 2027, IMG will deliver every match with more than 100 hours of studio programming available in Spanish, English and. French. So the house is full. How do we build a bigger house? That's where Zufa boxing comes in. TKO's track record, deep relationships and global reach, all of which we've talked about, are underpinning the sports return. The enterprise value growth. Growth is in Zufa boxing, which has quickly emerged as one of the premier boxing organizations in the world. We are building our roster of elite talent, now over 100 fighters under contract, and we are touring our cards. In the third quarter alone, we staged fights in New York City, Dublin, and London, where we will return this Saturday for our 12th Zufa boxing event of the year.

We have media deals with Scott. I dance for the globe stands the UK and Ireland, where we partner with Sky Sports on a parallel track. We also have a work for hire business in boxing. Think promoter sponsorship sales and media rights. This business hits our P&L. The centerpiece of the quarter was the Garcia-Benz Superfight at T-Mobile Arena on September 12th, which drew a sold-out crowd of nearly 19,000 fans. And an $8 million-plus gate. And coming up in December, the long-awaited Tyson Fury-Anthony Joshua fight takes place in Cardiff, Wales. IMG sold the media rights to Netflix globally, and we will be celebrating. calling the sponsorship inventory. Dana White is co-promoting the event. Now, I'd like to close with a few items for the balance of the year. First, on the Middle East, while we continue to monitor the situation closely. As of today, we fully anticipate our remaining events will proceed as planned. WWE Crown Jewel returns to Riyadh this weekend, and UFC Fight Nights come to Doha on November. November 21st, and Riyadh in early December. Second on capital allocation. We intend to use new debt and cash on hand to complete share repurchases under our previously authorized $3 billion repurchase program. We will be in the market aggressively buying back stock. As we close out the year, we remain laser focused on what we've called our year of execution. Today's decision to raise full year guidance once again.

This is the most direct expression of our conviction across the entire TKO portfolio. Andrew will now take you through the financials.

Good afternoon.

As Mark highlighted. Our fundamentals are sound, and we continued to execute across our businesses in the third quarter. Based on our performance to date and our visibility through year-end, we have raised our full-year outlook for the second consecutive quarter. We generated consolidated revenue of $1.36 billion. Adjusted EBITDA was $556 million, yielding a 41% margin. Revenue increased 21%. Adjusted EBITDA increased 54%. An adjusted EBITDA margin increased approximately 870 basis points as compared to the prior year. In the quarter, UFC generated revenue of $519 million, up 60%. Adjusted EBITDA... was $285 million, an increase of 72%. And UFC's adjusted EBITDA margin was 55%, up from 51% in the prior year. As we previewed on our last call, UFC's event mix had a favor... ...impact on Q3 results. UFC held 12 total events in the period, three numbered events and nine fight nights, compared to 10 total events in the prior period, comprised of two numbered events and eight fight nights. Media rights revenue increased 66%. Driven by a step up in fees related to the Skydance deal, which began in January, as well as the two additional events. Live events revenue increased 83% due to continued strong demand, including a record gate for UFC 329 and the two additional events. Financial incentive packages also contributed to the increase, with meaningful FIPs from UFC 330 in Philadelphia, as well as our fight night events in Abu Dhabi, Serbia, Arizona, and Oklahoma City.

Partnerships revenue increased 29%. Driven by the addition of new partners and higher renewals from existing partners across multiple categories, as well as the favorable event calendar. Consumer products licensing revenue increased 51%, demonstrating the ever-increasing appeal of the UFC brand with higher royalties across new numerous licensees. EA Sports UFC 6 has been a catalyst, achieving record financial and engagement metrics for the franchise. Adjusted EBITDA reflects the increase in revenue partially offset by an increase in expenses. Expenses primarily reflected an increase in athlete production and other event related costs, most notably the impact of an additional numbered event and fight night event, as well as UFC 329, which had a higher cost profile compared to other. Numbered events. Margins increased approximately 400 basis points year over year in the quarter, and we continue to expect meaningful enhancement in the UFC margin profile in the fourth quarter and for the full year. WWE generated revenue of 399 million in the quarter down 1%. Adjusted EBITDA was 217 million up 5%. Adjusted EBITDA margin was 54% up from 52% in the prior year. As previewed on our last call, WWE's event mix had a notable impact on Q3 results. WWE held one main roster premium live event compared to four in the prior year period, which included the launch on ESPN with Wrestlepalooza. Despite the unfavorable event mix, partnership revenue increased 28%. As expected, we saw significant acceleration in growth compared to the first half of 26, with performance driven by SummerSlam, as well as new partnerships and

goals across multiple categories. Media rights revenue increased 3%, primarily reflecting higher fees across WWE programming, most notably the ESPN agreement, partially offset by lower revenue recognition related to the three fewer PLEs in the quarter. Live events revenue decreased 30%, primarily due to fewer PLEs in the period, as well as a decrease in ticket sales for SummerSlam. Consumer products licensing revenue increased 13%, driven by higher royalties for video games and trading cards. compared to the prior year. We continue to deliver growth in this area at both WWE and UFC by executing multi-property deals for these iconic brands. Adjusted EBITDA reflected the decrease in revenue more than offset by a decrease in it. Expenses decreased primarily due to lower production, talent, and other event-related costs reflecting the lower PLE count. As with UFC, we expect WWE margins will increase meaningfully in Q4 and for the past. The full year. Shifting now to our IMG segment, we generated revenue of $391 million, an increase of 16%. Adjusted EBITDA was $116 million, an increase of 89%. Adjusted EBITDA margin was 30%. Up from 18%. Results included the favorable impact of the FIFA World Cup and on location. As Mark highlighted, this event was a massive success. In the third quarter, we recorded approximately $45 million of adjusted EBITDA related to the World Cup. For the full year, we recorded approximately $90 million of adjusted EBITDA for this event, meaningfully exceeding our estimate of approximately $75 million.

At the IMG business, the integration of IMG's partnerships and marketing sales team into TKO's global partnerships organization was on full display. Revenue increased over the prior year due primarily to new marketing and distribution deals for tennis and soccer, most notably the U.S. Open, Gulf Cup, and FIFA World Cup. These increases were partially offset by the absence of revenue from the bank. Annual Ryder Cup event. Adjusted EBITDA primarily reflect the increase in revenue as expenses were essentially flat compared to the prior year. Expenses primarily reflected the impact of the FIFA World Cup on location and biannual events. At the IMG business, such as the inclusion of the Gulf Cup and Solheim Cup, offset by the absence of the Ryder Cup. Corporate and other generated revenue of $61 million, a decrease of $2 million. Adjusted EBITDA was negative $63 million. An improvement of $12 million compared to the prior year. The decrease in revenue was primarily driven by a decline in boxing-related revenue due to a one-time benefit recognized in 2025 from the initial tranche of our equity vesting in Zufa boxing. The decrease was partially offset by an increase in PBR revenue. Adjusted EBITDA reflected lower expenses, primarily personnel and other operating costs, partially offset by the decrease in revenue. Now moving on to our capital structure. In the third quarter, we generated $450 million in free cash flow. Our free cash flow conversion of adjusted EBITDA was 81%. We ended the quarter with $4.647 billion in debt and $630 million in debt.

$131 million in cash and cash equivalents, in addition to $959 million of restricted cash. At quarter end, net leverage was two times based on net debt of $4.016 billion and LTM adjusted.

As you've heard me say before, maintaining a robust and sustained capital return program remains a top priority. Year to date, we've returned in excess of 1.6. Billion of capital to equity holders through our dividend and share repurchases. On September 30th, we made a cash dividend payment from TKO Opco of approximately $150 million, or $0.79 per share. We intend to continue funding our dividend with cash flow from operations or cash on hand. Regarding share repurchases, as Mark noted, given the strength of our balance sheet and what we continue to believe is a dislocation in our stock price relative to its intrinsic value, we expect to be aggressively buying back our stock. In October 2024, we announced the $2 billion repurchase authorization that we intended to complete within three to four years. In May of this year, we upsized the authorization to $3 billion. We've now completed buybacks under our original $2 billion authorization, well in advance of the original timeline, and we intend to use cash on hand, along with new debt, to complete buybacks under the remaining authorization. Regarding our outlook, as announced in our press release, we are raising our full year 2026 guidance for revenue and adjusted EBITDA for the second quarter in a row. We are now targeting revenue of $5.79 billion to $5.79 billion. $5.83 billion, an adjusted EBITDA of $2.295 billion to $2.315 billion. This reflects an increase of $10 million and $15 million, respectively, at the midpoint of the ranges as compared to the prior guidance issued in August.

The increase is based on strong operating performance across all of our businesses for the first nine months of the year, and our anticipated performance for the remainder of the year. Regarding our event calendar and cadence, as Mark noted, we continue to closely monitor developments in the Middle East. Our full year outlook assumes the slate of events scheduled in the region, including a WWE PLE and two UFC fight nights move forward as planned. If we're unable to stage these events. Our current outlook would be impacted. As we've said consistently. Our financial performance is subject to quarterly fluctuations inherent in our operations, most notably related to the timing of our live events in the mix of locations then. The first time we've seen the results of the year, we have a full year performance and believe results are best evaluated on that basis. With that, I want to highlight a few notable items looking forward to the fourth quarter. At UFC, the current count. Under for the fourth quarter is expected to include 10 live events, including four numbered events. This is comparable to the prior year period. With respect to FIPs, the mix of live events in the quarter will favorably impact results. UFC 333 in Abu Dhabi. and the upcoming fight night in Qatar both carry meaningful financial incentive packages, as did similar events we hosted in those markets in Q4 of last year. The fight night scheduled to take place in Saudi Arabia in early December also carries a significant FIP.

With respect to media rights revenue, results will continue to reflect the step up from the Skynance deal. At WWE, the timing of live events in the quarter is expected to favorably impact results. The Q4 schedule has four pre- premium live events compared to two in the prior year. Live events revenue will reflect the increase in the number of events, including meaningful FIPs for Crown Jewel in Riyadh and Wrestle Palooza in Perth. With respect to WWE partnership. We expect full year revenue growth in excess of 20%. As Mark articulated, this implies approximately 50% year over year growth in the fourth quarter. With respect to media rights revenue, results will reflect the favorable increase in total ninths of Maine Roth. and with respect to the PSTP program. At the IMG segment, we expect healthy revenue growth and positive adjusted EBITDA. The performance is expected to be driven by on location with revenue growth, primarily coming from hospitality sales, the eternal city tip off event in Rome and an increase. Olympic activity is anticipated to have a net favorable impact on adjusted EBITDA as costs ramped in Q4 last year in preparation for the Milan-Cortina Olympic Games. The absence of these expenses will more than offset continued... ...to end in Q4 of this year to support our ongoing sales efforts for LA-28. In terms of free cash flow, while we have not given formal guidance, we continue to target a free cash flow conversion rate in excess of 60%, normalizing for the impact of net payments related to the World Cup and UFC...

his rights deal with Skynet's. With all that, and given all we've delivered in 2026 and our growth strategy for the years ahead, we remain extraordinarily bullish on TKO's long-term outlook. I'll now turn the call back to Seth.

Operator?

Your first question comes from the line of Steven Lasik with Goldman Sachs. Your line is now open. Please go ahead.

Brandon Ross with light shed partners. Your line is now open. Please go ahead.

comes from the line of David Karnofsky with J.P. Morgan. Your line is now open. Please go ahead.