Release Date: May 08, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• TKO Group Holdings Inc (TKO, Financial) reported strong first-quarter revenue and profitability, exceeding internal expectations and leading to an increase in full-year guidance.
• The UFC segment achieved record-breaking live events, including the highest-grossing fight night in company history and a record-setting event in Australia.
• WWE's partnership with Netflix has significantly increased international viewership and engagement, with WWE content becoming a mainstay on Netflix's global top 10.
• The acquisition of IMG on Location and PBR is expected to drive top-line growth and cost synergies, with early benefits already being realized.
• TKO Group Holdings Inc (TKO) has secured major partnerships, including a multi-year agreement with Monster Energy and a groundbreaking partnership with Meta, enhancing UFC's global reach and fan engagement.

Negative Points

• The IMG segment experienced a 13% decline in revenue, primarily due to lower on-location activity for the Super Bowl and collegiate bowl games.
• There are concerns about potential macroeconomic impacts, with TKO Group Holdings Inc (TKO) monitoring consumer behavior and market conditions closely.
• The company faces challenges in securing new media rights agreements for PBR, with the loss of a domestic media rights agreement impacting revenue.
• The integration of acquired businesses involves significant corporate allocations and adjustments, which may affect financial reporting and transparency.
• Despite strong performance, TKO Group Holdings Inc (TKO) remains cautious about potential economic uncertainties and their impact on marketing budgets and premium experiences.

Q & A Highlights

Q: Can you provide an update on the UFC rights renewal process and any potential changes in partnerships? A: Mark Shapiro, President and COO, stated that discussions are ongoing with various third parties, including ESPN, which has been a great partner. The company is considering strategic options but has nothing to announce at this time. ESPN remains a key player in the discussions.

Q: How should we think about the free cash flow conversion for 2025, especially after the Endeavor acquisitions? A: Andrew Schleimer, CFO, mentioned that excluding approximately $300 million of non-recurring payments, the free cash flow conversion rate would be in excess of 60%. The view remains unchanged even after including the impact of the acquired businesses.

Q: Can you elaborate on the economics of the Canelo boxing event and its strategic alignment with other media rights? A: Mark Shapiro explained that the Canelo fight is considered a "super fight" and part of a broader strategy to host 12 cards a year. The Saudis fund these super fights, and TKO will handle media rights, partnerships, and production. The boxing organization will operate separately from TKO's main promotions.

Q: What drove the outperformance in UFC and WWE, and how does it impact the guidance for the year? A: Andrew Schleimer highlighted that the outperformance was driven by strong live events and global partnerships, particularly with a successful WrestleMania. This has led to increased confidence and an upward revision in guidance for the year.

Q: How is TKO approaching its $2 billion share repurchase program, and what factors influence its execution? A: Mark Shapiro stated that the company is accumulating cash and will be opportunistic in its share repurchase strategy. The program is expected to be linear over 3-4 years, but market conditions will ultimately guide the timing and execution.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.