Breaking Down TKO’s 4th Quarter & Complete 2023 Performance: Key Highlights Revealed

TKO Group Holdings, the parent company of WWE, has unveiled its comprehensive report for the fiscal year 2023. Here are the key highlights and notable transactions:

TKO Transaction Highlights:

On September 12, 2023, a significant transaction occurred as Endeavor and WWE joined forces, amalgamating UFC and WWE into a new publicly listed entity known as TKO Group Holdings, Inc. This merger encompasses financial data from January 1, 2023, to December 31, 2023, for UFC, and from September 12, 2023, to December 31, 2023, for WWE.

Full Year 2023 Highlights and Recent Developments:

• UFC demonstrated outstanding financial performance with a remarkable 13% revenue surge, reaching $1.3 billion. Moreover, Adjusted EBITDA rose by 11% to $756 million.
• UFC’s live events revenue surged by 34% to an unprecedented $168 million, fueled by increases in ticket sales and site fees. With 43 events held, UFC observed substantial viewership gains and achieved numerous revenue records at respective venues.
• Sponsorship revenue for UFC reached a record $196 million, marking an 18% increase attributed to new brand partnerships and renewal hikes.
• Celebrating its 30th anniversary, UFC organized a series of events to honor its rich history and reaffirm its status as the premier mixed martial arts organization globally.
• WWE witnessed record-breaking viewership for each premium live event. Domestic viewership and Peacock streaming hours surged by 25% and 22%, respectively, compared to the previous year. Additionally, WWE live event attendance soared by 34%.
• In January 2024, WWE finalized a long-term media rights agreement with Netflix, effective from January 2025, covering Raw broadcasts within the United States and all WWE programs and specials outside the country.

Full Year 2024 Guidance:

For the fiscal year 2024, TKO aims for revenue ranging between $2.575 billion and $2.650 billion, with a target Adjusted EBITDA of $1.150 billion to $1.170 billion. Additionally, the company sets its sights on a Free Cash Flow Conversion exceeding 50%.

Full Year Consolidated Results:

• Revenue experienced a significant surge of 47%, reaching $1.7 billion. This increase was driven by a $152.1 million uptick at UFC, totaling $1.3 billion, and a contribution of $382.8 million in WWE revenue associated with the period from September 12, 2023, to December 31, 2023.
• Net Income amounted to $175.7 million, showing a decrease of $213.3 million from the prior year, primarily due to escalated operating expenses, partially offset by increased revenue.
• Adjusted EBITDA1 surged by 29%, reaching $809.1 million, propelled by UFC’s $75.1 million increase and WWE’s $163.0 million contribution, partially offset by corporate expense growth.
• Cash flows generated by operating activities amounted to $468.4 million, slightly down by $33.3 million due to lower net income.
• Free Cash Flow2 stood at $419.8 million, showing a decrease of $69.5 million, primarily due to reduced operating cash flows and increased capital expenditures.
• Cash and cash equivalents were reported at $235.8 million as of December 31, 2023, while gross debt amounted to $2.761 billion.

UFC and WWE Segments:

For UFC in full year 2023, revenue surged by 13% to $1.3 billion, with Adjusted EBITDA up by 11% to $755.7 million. This growth was attributed to increased media rights, live events revenue, and sponsorship revenue. For WWE, revenue for the period from September 12, 2023, through December 31, 2023, was $382.8 million. Combining WWE’s activities from January 1, 2023, through September 11, 2023, with those of full year 2022, WWE recorded combined revenue3 of $1.326 billion, showing a 3% increase from the previous period. Adjusted EBITDA for WWE during the same period amounted to $163.0 million.

Corporate:

Corporate Adjusted EBITDA experienced a loss of $109.6 million for full year 2023. When including WWE’s activities from January 1, 2023, through September 11, 2023, and for full year 2022, Corporate combined Adjusted EBITDA3 was a loss of $196.3 million, mainly due to increased personnel costs and general administrative expenses following the formation of TKO.

Management will provide detailed insights, including key assumptions related to 2024 guidance, in today’s earnings call. Ringside News will have coverage of that call.

Do you think TKO had a good 4th quarter last year? Sound off in the comment section below.