TKO - Earnings call transcript Q2 2024 | TKO Group Holdings, Inc.

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Operator

Hello, everyone, and welcome to the Q2 2024 TKO Earnings Call. My name is Charlie and I will be coordinating your call today. [Operator Instructions] I will now hand over to our host, Seth Zaslow, Head of Investor Relations, to begin. Seth, please go ahead.

Seth Zaslow

Good morning, and welcome to TKO Second Quarter 2024 Earnings Call. we our press Investor ago, can which while on view Relations short issued release, a you A website. least A also recording days. at be will XX available via of our website this call for

Ari prepared Andrew handling Officer; call and Chief and Chief for Emmanuel, After Mark TKO's Q&A. from TKO's Chair our Executive Schleimer, open and will Officer, be Operating Shapiro, Andrew the Executive Financial questions. will Officer, Chief the and remarks President

information discussed the were our is our or remind implied and projections materially to forward-looking Commission the Please see and provide expressed XXXX detail. with results from uncertainties our purpose I second any statements assumptions. those call. risks, this for Exchange The this performance. with quarter of filings call everyone you assumptions prove materialize may to that will or or and/or regarding differ incorrect, If Securities want to uncertainties involve the that information on further these risks include

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

press found information our in IR GAAP. the between Reconciliations our in non-GAAP commentary financial we issued well provide to be considered with measures, additional can information accordance a or include also from believe and investors today ongoing website. substitute use tool measures for which be prepared on financial for operating evaluating as should GAAP not and will an in results Our today These non-GAAP posted metrics as release trends. in isolation as

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

Ariel Emanuel

delivered and half increasingly the entire particular, immersive worlds record our deal marked profitability partnerships in customized, TKO revenue experiences brand the event this TKO around are how landmark with and second record and Consumers we first and quarter. year, has WWE the demand communal on seeking capitalizing demonstrated Seth. off fans quarter a building first in and by the content. strong audiences, Netflix, premium sports are throughout Coming of weekends milestones, innovative Thanks, and

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

Andrew Schleimer

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through Now segments. I'll our you walk

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segment WWE quarter. revenue in million the generated $XXX Our of

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the costs to and in our reflected revenue in costs. expenses. the as and implemented decrease decrease other reduction personnel reflected a EBITDA The TKO production lower in well costs in Adjusted increase cost related planned decrease expenses a of initiatives formation as direct following

now Turning to corporate.

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to turning our Now outlook.

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Regarding affirming full year. adjusted an at outlook EBITDA excess our for we free are of of cash XX% flow conversion, the

In strong quarter conclusion, second that our we both businesses. generated strength at of continued results reflected

our excited road about and We for beyond. extremely ahead are XXXX prospects the and

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

Seth Zaslow

Thanks, questions. Andrew. for the call Operator, we're ready to open

Operator

Ross [Operator from Instructions] comes Partners. LightShed Our first question of Brandon

Seth Zaslow

Brandon, you next Charlie, you question. Brandon, there? there? go the why to are we don't are

Brandon Ross

me guys at you can't all. hear Yes,

Mark Shapiro

Yes, we Brandon, you and Andrew. now. got Mark it's

Brandon Ross

Sorry about that.

Mark Shapiro

the you're hit. when go to Brandon, and first guy

to got can't maybe. the of be put we you calling back times. We -- you got X you be You and at line the there can't to

Brandon Ross

technical take difficulties. I there. on first, I'll How about blame was the the that.

the especially of size highlighted venue ways, center a really couple it how bigger lot at a you've One things. attacked has already a is, including prepared different much So become, of WWE. live pricing. profit of in in And events

this where that point. you at are Just to optimization in wanted sense get a journey of

of future kind prices? helpful. you be us stadiums are we any How give to see model the out multi-night, color to on going you How there PLEs much this optimizing would the and move ticket go could to do into about is room

Ariel Emanuel

there. little all a map the you're Look, Yes. over

want would to sure the from skies detraction want whatsoever a right a no fan, Live But a you of sports So couple whether do ahead. it's consumer, start a site wood, them of revenue mean say clear but the ticket number that we're a synergies us. out press know, Events fee to a just us. just now, knock make We've ask there's we you put I I'm as them clearly sector it's the perspective, it's to -- from questions now, on off, maybe listing I seeing I going for done our release we every time of not them. and growth yields number huge deal. and a from

putting already well. at there together, year, number teams to this budgeted just WWE. we're side, our sponsorship, been the way a as that media offices, should I go their the leveraging our there's fees we're WWE right clear growing getting see Our the of of on and on the for a mean, and skies internationally, has X headroom the their kind world powerhouse around for UFC properties lot IMG we now they're be are other And the growing. these people, rights UFC in to us, their with soldiers commanding that countries

So these for deal just sense I don't viewership you that underestimate viewers. the for tell would is Netflix are play look, about the casual WWE And the okay, in new here, New discovery, right? Netflix meaningful us. audiences, areas all

site a it to that page, promoted, for platform comes already there to right going going specifically, WWE sponsorship. be And being real folks will us, marketed. us. will appointment, You're and It Brandon, is that are The serve fans discovery That's will front and to fees when a to go Netflix to new with of WWE, follow. be that will audience they us. whole but be being help

Brandon Ross

up, the guess, and up. with it is moving the I the helpful just pay-per-views have. in pricing talk seeing us for you since been just if was asset trying about Got you're that And deal then WWE. past, UFC's value evolved intrinsic growth the I think extremely recent it. was if PLEs viewership NBA to wrapping of about especially has could actually focus. In what wondering really on last the finally how wrapping you pay-per-view trends. UFC the of viewership deal to is you've into the And and

Ariel Emanuel

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higher of them, piracy period And too high. era the little you by over numbers quicker this probably pricing little where piracy in especially up, a as really of think it partnership, driven our liked. went we So a our jacked than and of we and we to have we're kind them they voiced would asked, seeing that's that

they We Pitaro terms in Vegas and that very you took with get Dana. meeting discount. feedback. Las promotion Jimmy price marketing receptive ago in So few months buy offering in certain you once where had a a you And were the new well if of course, the will, the then of down, they to if a date, increases going date. that numbered a of price you pass And fights, advance were to a

And they're seeing good success with that.

we're in to Live it records, specifically the So we're planned many where audiences and that the our see when even which comes with we're buys for, than commanding and like selling in higher it yield WWE also release, cases, we being you breaking the all is, pay-per-views. sustaining press out like Events, in

about we really So feel good that.

Operator

Ben Stanley. next comes Morgan from question Our of Swinburne

Benjamin Swinburne

you revenues yet unpack Andrew, margin I think, I and another were huge growth what's maybe were there Live mid-XXs costs that's because Events really Two down. just impressive. in you down, with On -- expenses year-over-year questions. WWE at this happening WWE production obviously, could said

uncertain this thought settlement at you'd raise, guidance -- flow also I -- have cash on take come then but on free the point. flow, the I guess the figured would out the And have up I I maybe free guidance it's just might of cash just conversion thought too the

could flow comment cash free on I as you well. maybe wonder So just

Ariel Emanuel

Ben. Yes. second the X take first, I'll

in year. free we final of the and connection the As already in approval, you or the anticipated otherwise know, by same received would with made first At year, have time, should that approval payments we which adjusted include our then the of we the settlement. end to recorded million the a preliminary charge flow readjusted have cash quarter been $XXX was this conversion

purposes expense revised in the free We have event up the our flowing cash if outflow our any financial of this not for ends were to that of conversion. flow said, through adjusted That being delayed or a be cash in statements for payments settlement.

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have cause But But will, that come modify updated any to this the develop and time for we the don't of information expectations guys pass. as would our of us you material to any we information keep at will balance posted year. things course,

to asked. and also Brandon hit I I something, WWE, to want on Going think,

WWE and or quarter carry higher Events tend then and early X April, additional to WrestleMania year these contribution. other revenue WWE, a PLE at was quarter big We margin by quarter Live a prior PLAs. for higher gross margin quarter anchored higher had versus This margin in this and the

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television able audience in not venue our the and ultimate the to making smaller arena. elements some increase reduce production we've In by our just cases, inventory changing been in for for show product and or saleable

there's there efficiency So well. as

Unknown Executive

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on And or Lee and hand to glove side, the cost production are storage trucks Craig our fitting get usage. from cloud and everywhere in down to working

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Operator

of from comes David Karnovsky question JPMorgan. next Our

David Karnovsky

this I'm the the those interested paid the to of is highlighting term. drive competitive way cities Is or as look this of to of you venues get kind a fees, kind best value long to pure optimize over the to -- more you way possible a site game volume on that the where how as view Mark, have this of as and events increasing about events been pricing? many kind on

Mark Shapiro

Look, Yes. it's right? on it there. it's both. the mean, a David, I balance, head

our attractive hardcore further just like events we're have York but see and cultural and and Open events we the of New right culinary sports concerts U.S. kind We festivlizing at really Ari taste opportunity, than adding certainly which our obviously, weigh for fan, a event. in also the you making now. making more -- it on is doing it to focused of are events and With really

they can more is you which will. X-day, the municipalities expand X from The we or becomes could It come X-day we think cities to the something really X and that, moves I if And can days, X-day. do event stay, really town. that a we that the from to be, it of would could like and whatever spend expand their if they us number to or see to might communicated bureaus more of days have we more tourism

Vegas of each the itself, for what and the So favorite Trump officials, they but really they transparent letting in as these and demand these these the being we're relationships look of just government we're same the know to and leverage, ticket time but to we're cities our going for line, really the a overall and easily event, power end time, in other. WrestleMania, numbers improving the of could So pitting quality our a for the driving fill it And same power to Look, the sense up duration against them and both cities content using with the have at and the looking Minneapolis. hard bargain in the it's while, content hard like truthfully, gone we the for. fact, Vega local our our us do really price have to of and of get power the driving

Ariel Emanuel

historically adding bring boards, is worth largely thing cetera. only And events continue et overseas, we tourism The WWE was from WWE model domestic a to is as product. for there this demand

this our nicely So fit effort to quite line item. in grow those

David Karnovsky

an Prime. as the the And say WWE for sponsor sponsorship then addition on we of a added Wingstop you which is

events for over your biggest into you and in those out entering building wanted Just see now could how strategy dig the you if terms sponsors have see to limiting that of you time. to

Mark Shapiro

about We don't all any see don't. We It's frankly. limitations, price.

when to of and UFC, new combined are be If ring, out you there Norris Grant if global it center course, you there out you you are to clock the canvas, in want the Luke the to be comes be want we we talking the I partnerships group, want want corners, in mean, to running to categories. the

there for business. we're traditional talking out are to categories -- and We open

teams to get about mean I the day, their and end looking league. the We're certainly, open the at I any ever never and as these commercialize we're we're definitely the it creative league going -- brand. I've seen. anything, say But over we're the And to frankly. commissioner. X are cheapen not as we're of to would

with Crypto.com, shucking And you constantly what's and only pivoting deal and when not. have we're these We or guys, we're new even frankly, would working for our creativity. jiving say at Budweiser would you by limited what's control I on and Monster, say, Wingstop look total our and I own

create course, or something What you the where contract increase. comes And moving can we're an that with what want in we else do for when of usually you? else changing

for market So events. ad frankly, all experiential dollar about activation And and, monetizing strong, it's the not for but of course, sporting opportunities. media the and just certainly is maximizing

You don't David. want. fast see us not fill enough, only pricing it we getting yet up the because It's we're

We will not away give inventory.

Operator

question from next UBS. of Gravett Our Ryan comes

Ryan Gravett

you're to Can to back circling on share an more relative international rights, would in give on the environment you're just characterize you sports are the if how how what performing? what update of international just step-ups on demand kind we're seeing broadly but for in renewals Maybe rights rights seeing And willing the side. us the you U.S. UFC

Mark Shapiro

contracts. current to pick all, because but would rights. remember, for our is, don't contracts Yes. roll they'll there international of countries of most What the will when There first part, be them you Netflix tell several yet we when I off, have, January, up. regions will moved But in those they have Netflix and

-- is So the us around would The is we a they this you world business kind and opportunity doing. And of to UFC tell contact the second kind XX the around the a to is really get secret up get person for offices We us gives because I weapon what primarily can have is basis, us lot gives none. to of name they're it. corners step that see expect of it intelligence IMG a conversation. fact is

tell numbers get increases specific -- deals is seeing when and international seeing is But on the We're we're I hot not going is international off. we're as nonetheless, domestically what U.S. it is roll would we're what to in not the What any you getting. and

Operator

comes Stephen next question Laszczyk Sachs. from Our Goldman from

Stephen Laszczyk

for maybe Live on First, Mark Events.

Live across You of impact maybe guys still the the curious consumer see moment? of could seeing to take if there Events trends the swath a X over thoughts be then properties pretty just large distribution might on across some I properties. at the income where the some be opportunity year price any next And side. on the more you're your you

And called September. Andrew, Sphere out the you in then

if expect come curious around in the or add in, we some the of Just could to should costs quarter. you context any see revenue

Mark Shapiro

and They're to or theme the the Disney side, were back. on down course, of getting unstoppable. and little of slow cover will, Disney were would just you talk holding parks hearing I the parks post consumer, the income about listening Look, I bit. all interesting the just moderating I kind Ari is tell I guess seeing a Stephen. call things maybe Bob when lower-end normal they're if it back Thanks, Iger and is COVID, to earnings was you to this quarterly because,

I just tell doing any a parks, meanwhile, maybe more you mean We're the is not then I said higher-end theme they're but sales. can slowdown. we we it's specifically, credit. also where seeing not traveling All internationally. about And is can Stephen, you he consumer sit tell advanced the

I WWE the of week in kind side. of is and think out the all on matchups and the delivering that creativity week of

with that at Friday going that's audience by is the Night And group a short-form have going a to the strong, Sphere we've spectacle fans announce Performance markets, He's seeing targeting a in real grow the be got audience. we're Monday we'll us of just due We're City, aiming there Night strong. because priority really growing Age side coming just on at and the on Hispanic we're Demos The pickup opened Institute to audience, deals Show. Hispanic are Mexico of on more He's the is they're got NXT. which content, and the and is bunch tall really to lot a order. other UFC is that He's in a on on for Latin bore. Nikon the a talking way, got full time. a currently Show. working content providers

right pricing. not that together. with for are selling a being take mean WWE a providers We're see We our But get side, good lot we us we We're leg careful. really we're working UFC just being out. and see we're our the when WWE ticketing week dynamic place it's up to probably expected merger So But this watching and don't be enough you granted. the now. to put it aggressive of out but in week on

our the strong. partners per very for are F&B merchandise And also the the caps on side, and

-- think a X So these long properties that it's it's such fact event the a I -- duration. the

of course, on WWE so as takes You fight out many well. a play get to night a fights while UFC. for And

for WWE for I still the a the family buy think It's a we're consumer. a good side. -- great the night event It's out. great on

trying just the for comes it right cap. we're capitalize sports And now, break when on to fans, ticket the the UFC really is that to in

Andrew Schleimer

we're just much this we've being color. going at Look, Sphere, is those the bullish, obviously, event. for arena And cultural talked publicly be has home. in about On this some to the for spectacle massive those in And a we're how investing Dana a stated this obviously, and event.

On the if top the ever side, done. of the be not that gates, X this we've meaningfully largest largest will gate

the on it's the largest an we cost it's even than guide. our then going event. And anticipated, in And reflected be single in expensive new side, that we're and investment making more to originally that's

of tailwinds into balance the -- excuse So headwinds some year. going the about we me, going the sheet balance talked into

has a the expense But direct we're if dollar-for-dollar X meaningful it's Spere. seeing on there's at headwind impact the EBITDA, incremental that

Mark Shapiro

anecdote I Paris -- little I our now having us are Olympics of a Ari and held always coming sort not are in the else premier to a brand. we decision and right the to more in Stephen, dinner for them X than that the I based committed on And dollar making a being And fact, partners. for and of a Dana ad comment Andrew growing that's you position -- from and credit with of this here. a every made anybody in we about history,

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capitalize event base this use fan for to market fan importantly, the and grow our LatAm on us. growth is that We expect engagement to increase most to area to the

Operator

Our next of comes Supino Wolfe from question Research. Peter

Peter Supino

growth an especially Netflix also I distribution the you your to demand. terms hear from your think wondered we driver and could from I'd of bigly of and that outside distribution longer-term important And the as program in that you States, since opportunity us love of such prior get as time. compares that's can event if international how about about to help over international exploit United count productivity to you'll

Mark Shapiro

going Netflix And but really about audiences, would the mean international I question, first the say new now, could importantly, goal. our priority, Peter. we're but for it's that way, right? goal in a the by talk the in not is that priority expansion see I customers, I it's expanding fan engagement, in, one international with avidity fan guess the is reaching further right up and Netflix partnership, first. we new not countries more countries, Thanks, the a them. new like is XXX in fans, already we that we're Look, on to of popping you're what to love lot bringing

and buy hand. a What's attention a us for we and new to their work in of got launch the do hand outdoor if also we've So can't together plan get priority And audiences fans. will. we'll bring the to for in checkerboarded in the the And we'll fact, see you right, world, grow media to where an new and campaign co-marketing that audiences. priority audiences, expanded areas what's Brazil we'll across them like

it. way at And we're looking the that's really

more a side sport that we not lot WWE, base. we're increase the of it's our impressive places, but to to room passionate to engagement. has in It's need but UFC the want table. to the fan We again, bring and USC placed the specifically to XX% need female We women So course, we there. of is already like increase grow on not families,

we're some of I but of in talking love how rating the we're trading have place to card. XX-XX fights. the women watching at not onetime and ESPN on where we're terms side fighters, to we're in might talking feedback that get women like getting just that this the USC especially direction, from at a many impossible, are entire And sounded

deep partner. going to power very we're look, of we've partner. a that Netflix to comes of marketing The the it dollars and of the into dig is marketing power as pockets got So worldwide. attractive when Netflix's a Netflix programming, as We're power

and, bullish course, we're side. the international of do going so a standpoint yield rights ticket to And on we're on how from IMG

question. first The

Andrew Schleimer

thinking Peter, it, Yes. Look, in about just I thinking big. we're think

As for I to articulated think Netflix majority bringing the and opportunity build were majority, is domestically. Events earlier, new markets a bases had major here of while historically And internationally, shows build us. overseas we those new to some to their WWE overwhelming fan vast Live shows premier prime be a alongside going fanafinity

in it Perth, said be up I in just seen in appeal significant site been in involved content our in it as Germany whether for earlier, well. us it the for opens There then in that markets internationally. as more did is second the quarter. be PLE backlash in well it these And as fees We've France. Australia, time limited recent a we've whether We

we're we international the the to the top line. do events more more opportunities for the particularly going have, So

So going for it to size but pretty we're feeling we're you, good. not

Mark Shapiro

New way, warning Zealand no not Netflix We X coming messaging no Yes. by marketing but was I in Look, in was Live was of test the won in programming of was that's did there mean, insane. not there on Netflix, because, point being which, testing course, were and prior to to tech, or worried, Events we Zealand, the hitch. that mean this they terms we of got the you to our ratings. New a I back too. UFC night did conservative

were we excited see to that. So

when numbers the was back. audience But just that came

rights definitely be us, international part for long-term fees of growth that Obviously, site will when thinking you're really capitalizing strong. Obviously, we're deal sponsorship, our equation. -- but fees media is So the are on

Operator

question comes of Our ROTH next Capital. Eric from Handler

Eric Handler

before a lot frame you expires X the thinking already similar deal. you a get that time you deal that deal to how are with that the At do been situated think UFC after WWE deal, about -- as PLE the guess PLE Do quarter want I run about point, this UFC has the asked. you But deal? at UFC

you would So any there color be give great. can

Mark Shapiro

well. A Yes. mean I we've of speaking PLEs just terms there. the in Ari, thoughts whole Look, see got couple as timing these tell -- and course, Nick Thanks, in how kind and I here you're UFC play renewals. I'll role Andrew, right the is cover we of course, situation know for because media but And key I of you this. of of Eric. holistically Laurence a the

I I competition X Netflix content, remains the look don't MBA Amazon premium higher to it extremely those is, which need strong, Adam going was for between Day think, be. such ours was market the big even and to you The there where Netflix, for games. no thought as renewal, than tell further games Christmas than on

French for did much the French and and Bros, announcement smaller IMG deal Warner just Federation. the for Zaslav even the would for them think by that I I that add Open, property,

of rights for will in value and, Open get to also that how U.S. with IMG the is USDA But the USDA for on at I'm that deal on the that's course, going the ESPN And fee year Open. know representing turn a $XX on year, million years the million to And $XX their years optimistic negotiation. out return. very has went $XXX from rights that ESPN left French XX for X million USDA a I that

we're the airs comes when subs linear as and network PLEs, very to both strong both in that to direct-to-consumer television. year-round are it mean, are reducing and this this environment attracting strong UFC and content very is in you've strong churn it the were I Now viewers whole and to come relates and

deals or equation important the and whether not it's going Let's a are forget, those still part much -- ABC rights of NBC very very in forward.

to ABC You see where deal will with NBC be carrying ESPN. addition games the and it NBA in

buyer whether Night XX ESPN, owned here So feel our say, years or seller back rights I've assets. renewals. on my days for to been fees side, should doing NASCAR I very Football, about at both the and the deals, right dating good we these it's Monday

as as sustained important very rights hot And warm. it sometimes timing tell this I sometimes but that. very, strong timing, is and they're understand it but seen is it's they're they've to about Sports you and are can I've hot

So platform how be people Sports now. right the hotter, to or is and to what next are going are Sports really by see We'll Sports what necessarily way. live, unifying, premium. important it's out, isn't plays they're today it that bringing could year be in. are every sports

the we there's enter what has and don't timetable coming the want I time. but numbers windows. in Operator, So take XXXX, PLEs, this that To we our to at when see timing, X strong, we'll anticipate it point we about been is discussions are but no question. your set in last about happens --

Operator

Citi. of question final comes Our today Jason Bazinet from

Jason Bazinet

You you take and when rolling TKO good obviously a guys these properties the didn't cost on clock part back the family done with X going become job all and you of the PBR created inside it mind you and that revenue us just side could of why the of together. TKO. forward? have Do Endeavor, is something sports is PBR assets including And part make reminding

Mark Shapiro

he was you I to of day is this of regard story. we mean specifically, at end it period -- only in was with properties, doing PBR say I What never was the that open on these if that, if Jason, cards. just the that, with merger, X, all, first negotiating from to time. would will, were just And X

So there on discussion was no PBR.

as anything value that, through I going of view reason mean, So the else to as of end beyond that M&A And why lens happened. story. creation, that's the we're always look, far

see accretive. to going an We're want that And clear to X.X. TKO accelerate not our is going on, disciplined. properties our going Endeavor now, value want we to see value story. always that look model. one We're anything ever don't ratio don't leverage We're We we'll eye be We're media. We long we our to to to creating complicate in be obviously, keep going at. and are synergies. the cost growth. that and of And be opportunistic where have cleanest term going there. our Right assets revenue we power to stories are

with capital dividend return to pairing a is also share whether is think lens that has program, I the a a priority be or buyback, of that's viewed us. that a for

Jason Bazinet

But uniquely not nothing sport that like doesn't orthogonal building on versus about sports PBR there's feel There's about that's to side. asset nothing that different it's other sports. whatever you're the the

Mark Shapiro

assets look, that companies, a is with its on obviously board. plans today's Own a league I joining it. your Keep conclude going are everyone, can And But TKO. they us or for public on separate mean, the Thank for their side. wrong. the get mean as I'm TKO I That's right? don't -- take now. in interest me Silver it and comment on in own No. very to shareholders, not private. you, you these great mind. company. Operator, hands speculate Lake's call X for endeavor that begin to on We're call

Operator

joining. so This you. Thank much Thank concludes call. today's for you

You may disconnect your lines.

TKO (TKO) 8 Aug 242024 Q2 Earnings call transcript