Table of Contents Title of each classTrading Symbol(s)Name of each exchange on which registered Class A Common Stock, par value $0.00001 per share EDR The New York Stock Exchange Emerging growth company ☐ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1 ...

Financial Data and Key Metrics Changes - The company generated approximately $1.1 billion in revenue for Q1 2021, representing a 10% decline from the same period last year due to COVID-19 impacts [60] - Cash and adjusted EBITDA for the quarter increased by 13% to $199.5 million [60] - Adjusted EBITDA for the Owned Sports Properties segment increased by 42.3% to $145.5 million [63] - Adjusted EBITDA for the Events, Experiences & Rights segment decreased by 43.5% to $39.1 million [66] - Adjusted EBITDA for the Representation segment decreased by 10.4% to $61.5 million [68] Business Line Data and Key Metrics Changes - Owned Sports Properties segment revenues increased by 22.1% to $283.5 million, driven by media rights agreements and higher sponsorship fees [62] - Events, Experiences & Rights segment revenue decreased by 19.3% to $539.6 million due to event cancellations and attendance restrictions [64] - Representation segment revenue declined by 15% to $243.2 million, primarily due to reduced advertiser spending [67] Market Data and Key Metrics Changes - The company is witnessing strong demand for live events and experiences as restrictions ease globally, with significant attendance at events like the Great Ocean Road Running Festival [36][37] - The UFC's media viewership is up 7% compared to 2019, indicating a recovery in audience engagement [24] - The company has secured significant partnerships, including being named the Official Global Hospitality Provider for the Olympic and Paralympic Games [12] Company Strategy and Development Direction - The company aims to leverage its integrated portfolio across technology, sports, entertainment, media, and gaming to capitalize on emerging trends [10] - There is a focus on expanding international deals and enhancing sponsorship opportunities, particularly in markets like China [77][78] - The company is committed to strengthening its balance sheet and deleveraging while exploring growth opportunities [73] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery trajectory, noting that the reopening rates are happening faster than anticipated [70] - The ongoing pandemic continues to impact operations, but there are signs of recovery in various segments, particularly in live events and media [70][96] - Management highlighted the finite number of IP creators and the increasing demand for content as a long-term growth driver [101] Other Important Information - The company expects to generate revenue between $4.76 billion and $4.83 billion for the full year 2021, with adjusted EBITDA in the range of $735 million to $745 million [72] - The company plans to repay $600 million of its outstanding debt in Q3 2021 [72] Q&A Session Summary Question: Growth drivers for UFC - Management highlighted international deals, increased sponsorship opportunities, and the expansion of Pay-Per-View and digital content as key growth drivers for UFC [75][78] Question: Guidance assumptions regarding live events - Management clarified that guidance assumes a gradual return to live events, with expectations for Pay-Per-View events to have live audiences in Q3 and Q4 [96][97] Question: Media consolidation impact - Management noted that media consolidation is indicative of high demand for content, which benefits the company as a major player in the ecosystem [100][106] Question: Integration of On Location and Olympics impact - Management confirmed that On Location is fully integrated and is expected to significantly enhance the live events business, particularly with upcoming Olympic events [112]

[Forward-Looking Statements](index=4&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section outlines the forward-looking statements in the Quarterly Report, emphasizing they are predictions subject to known and unknown risks, uncertainties, and assumptions - All statements other than present and historical facts are forward-looking, intended to be covered by safe harbor provisions[12](index=12&type=chunk) - Key risks mentioned include the impact of the COVID-19 pandemic, changes in public and consumer tastes, adverse economic conditions, ability to adapt to new content distribution platforms, reliance on professional reputation, dependence on key personnel relationships, ability to identify, sign, and retain clients, potential conflicts of interest, loss of executive management, dependence on distribution partners, ability to manage acquired businesses, immigration restrictions, technology failures or security breaches, substantial indebtedness, intellectual property protection, compliance with governmental regulations, union and guild requirements, control by key shareholders, and tax matters[13](index=13&type=chunk)[14](index=14&type=chunk) [Risk Factor Summary](index=6&type=section&id=RISK%20FACTOR%20SUMMARY) This section provides a concise summary of the principal risks and uncertainties affecting the company's business, advising investors to carefully consider them - The COVID-19 global pandemic could continue to **materially and adversely affect** the company's business, financial condition, and results of operations[19](index=19&type=chunk) - Changes in public and consumer tastes and preferences, inability to adapt to new content distribution platforms, and dependence on discretionary and corporate spending are **significant risks**[19](index=19&type=chunk) - Success depends on maintaining a professional reputation, relationships of agents/managers, and the ability to recruit and retain qualified personnel and clients; potential internal conflicts of interest also pose a risk[19](index=19&type=chunk) - The company faces risks from **substantial indebtedness**, inability to protect intellectual property rights, extensive U.S. and foreign governmental regulations, and compliance with union and guild requirements[19](index=19&type=chunk) - The company is controlled by Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders, whose interests may differ from other shareholders[20](index=20&type=chunk) [Definitions](index=8&type=section&id=DEFINITIONS) This section provides definitions for key terms used throughout the Quarterly Report, clarifying references to the company, specific financial entities, and equity units - References such as 'we,' 'us,' 'our,' 'Endeavor,' and 'the Company' refer to Endeavor Group Holdings and its consolidated subsidiaries after the reorganization transactions, and to Endeavor Operating Company and its consolidated subsidiaries prior to the reorganization[22](index=22&type=chunk) - Key entities defined include Endeavor Group Holdings (EGH), Endeavor Manager, Endeavor Operating Company (EOC), and Executive Holdcos[22](index=22&type=chunk) - Various equity interests are defined, including Endeavor Catch-Up Profits Units, Endeavor Full Catch-Up Profits Units, Endeavor Partial Catch-Up Profits Units, Endeavor Manager Units, Endeavor Operating Company Units, and Endeavor Profits Units, detailing their economic characteristics and conversion terms[22](index=22&type=chunk) - The 'reorganization transactions' refer to the internal reorganization completed in connection with the May 2021 initial public offering, after which Endeavor Group Holdings manages and operates the business and controls the strategic decisions and day-to-day operations of Endeavor Operating Company through Endeavor Manager, including EOC's operations in its consolidated financial statements[22](index=22&type=chunk) [Part I – Financial Information](index=9&type=section&id=Part%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This part presents the unaudited financial statements, management's discussion and analysis, market risk disclosures, and information on controls and procedures [Item 1. Financial Statements (Unaudited)](index=9&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section provides the unaudited financial statements for Endeavor Group Holdings, Inc and Endeavor Operating Company, LLC, along with detailed explanatory notes [Endeavor Group Holdings, Inc. Balance Sheets](index=9&type=section&id=Endeavor%20Group%20Holdings%2C%20Inc.%20Balance%20Sheets) Endeavor Group Holdings, Inc. Balance Sheet Summary | Metric | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :----- | :---------------------------- | :------------------------------- | | Total Assets | $25,095 | $25,095 | | Total Liabilities | $20,745 | $20,745 | | Total Shareholder's Equity | $4,350 | $4,350 | [Endeavor Group Holdings, Inc. Notes to Financial Statements](index=10&type=section&id=Endeavor%20Group%20Holdings%2C%20Inc.%20Notes%20to%20Financial%20Statements) - Endeavor Group Holdings, Inc (EGH) was incorporated in January 2019 to complete reorganization transactions and an initial public offering (IPO) to carry on the business of Endeavor Operating Company, LLC (EOC)[28](index=28&type=chunk) - The company closed an IPO of **24,495,000 shares** of Class A common stock at **$24.00 per share** on May 3, 2021, including shares from the underwriters' option[31](index=31&type=chunk) - Prior to the IPO, a series of reorganization transactions were completed, including amending EGH's certificate of incorporation to provide for Class A, B, C, X, and Y common stock, Endeavor Manager becoming the sole managing member of EOC, and EGH becoming the sole managing member of Endeavor Manager[31](index=31&type=chunk) - Subsequent to the IPO, a private placement of 75,584,747 shares of Class A common stock at $24.00 per share generated approximately **$1,901.5 million in net proceeds** for EGH (after underwriting discounts/commissions but before offering expenses)[33](index=33&type=chunk) - EOC acquired 100% of Zuffa (Ultimate Fighting Championship) through the UFC Buyout, using **$835.7 million** of net proceeds from the offering and private placements[33](index=33&type=chunk) - The 2021 Incentive Award Plan became effective upon IPO, reserving **21,700,000 shares** of Class A common stock, with significant equity-based compensation grants made to directors, employees, and service providers, expected to result in material charges in Q2 2021[33](index=33&type=chunk) [Endeavor Operating Company, LLC Consolidated Balance Sheets](index=12&type=section&id=Endeavor%20Operating%20Company%2C%20LLC%20Consolidated%20Balance%20Sheets) Endeavor Operating Company, LLC Consolidated Balance Sheet Summary | Metric | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :----- | :---------------------------- | :------------------------------- | | Total Assets | $9,607,735 | $9,633,634 | | Total Liabilities | $8,433,450 | $8,478,885 | | Total Members' Equity | $982,993 | $963,976 | - Total current assets decreased from **$2,065,208 thousand** at December 31, 2020, to **$1,951,723 thousand** at March 31, 2021[36](index=36&type=chunk) - Total current liabilities decreased from **$1,997,078 thousand** at December 31, 2020, to **$1,917,494 thousand** at March 31, 2021[36](index=36&type=chunk) [Endeavor Operating Company, LLC Consolidated Statements of Operations](index=13&type=section&id=Endeavor%20Operating%20Company%2C%20LLC%20Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations Summary | Metric | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | Change (YoY) | | :----- | :----------------------------------------------- | :----------------------------------------------- | :----------- | | Revenue | $1,069,582 | $1,190,397 | -$120,815 (-10.1%) | | Operating Income | $94,498 | $53,764 | +$40,734 (+75.8%) | | Net Income (Loss) | $2,376 | $(51,261) | +$53,637 | - Direct operating costs decreased by **$134,892 thousand (19.8%)** year-over-year, from $681,284 thousand in Q1 2020 to $546,392 thousand in Q1 2021[38](index=38&type=chunk) - Provision for income taxes significantly decreased from **$48,604 thousand** in Q1 2020 to **$5,085 thousand** in Q1 2021[38](index=38&type=chunk) [Endeavor Operating Company, LLC Consolidated Statements of Comprehensive Income (Loss)](index=14&type=section&id=Endeavor%20Operating%20Company%2C%20LLC%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Consolidated Statements of Comprehensive Income (Loss) Summary | Metric | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | | :----- | :----------------------------------------------- | :----------------------------------------------- | | Net income (loss) | $2,376 | $(51,261) | | Total comprehensive income (loss), net of tax | $18,928 | $(143,194) | - Unrealized gains (losses) on interest rate swaps swung from a loss of **$(79,999) thousand** in Q1 2020 to a gain of **$15,076 thousand** in Q1 2021[40](index=40&type=chunk) [Endeavor Operating Company, LLC Consolidated Statements of Redeemable Interests and Members' Equity](index=15&type=section&id=Endeavor%20Operating%20Company%2C%20LLC%20Consolidated%20Statements%20of%20Redeemable%20Interests%20and%20Members'%20Equity) Consolidated Statements of Redeemable Interests and Members' Equity Summary | Metric | Balance at January 1, 2021 (in thousands) | Balance at March 31, 2021 (in thousands) | | :----- | :---------------------------------------- | :--------------------------------------- | | Total Members' Equity | $963,976 | $982,993 | - Comprehensive (loss) income improved significantly from **$(146,889) thousand** in Q1 2020 to **$(8,318) thousand** in Q1 2021[42](index=42&type=chunk) [Endeavor Operating Company, LLC Consolidated Statements of Cash Flows](index=16&type=section&id=Endeavor%20Operating%20Company%2C%20LLC%20Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Summary | Metric | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | | :----- | :----------------------------------------------- | :----------------------------------------------- | | Net cash (used in) provided by operating activities | $(70,830) | $92,522 | | Net cash provided by (used in) investing activities | $7,610 | $(351,779) | | Net cash (used in) provided by financing activities | $(77,843) | $313,884 | | Cash, cash equivalents and restricted cash at end of period | $1,048,099 | $934,678 | [Endeavor Operating Company, LLC Notes to Consolidated Financial Statements](index=17&type=section&id=Endeavor%20Operating%20Company%2C%20LLC%20Notes%20to%20Consolidated%20Financial%20Statements) - Endeavor Operating Company, LLC (EOC) is a global entertainment, sports, and content company[49](index=49&type=chunk) - The COVID-19 pandemic had a **significant adverse impact** on EOC's business, operations, and cash flows starting March 2020, leading to event cancellations/postponements and the implementation of cost-saving initiatives; recovery is expected to be gradual[55](index=55&type=chunk)[56](index=56&type=chunk) - As of March 31, 2021, cash and cash equivalents totaled **$880.9 million**; the company believes existing cash, cash generated from operations, and available credit facilities will satisfy working capital and debt service requirements for at least the succeeding year[56](index=56&type=chunk) - In 2020, EOC acquired On Location Events, LLC (OLE) for **$441.1 million** and the remaining 50% of PIMGSA LLP for **$37.0 million**[57](index=57&type=chunk)[60](index=60&type=chunk) Content Costs (in thousands) | Metric | March 31, 2021 | December 31, 2020 | | :----- | :------------- | :---------------- | | Total content costs | $552,477 | $376,205 | Goodwill and Intangible Assets (in thousands) | Metric | March 31, 2021 | December 31, 2020 | | :----- | :------------- | :---------------- | | Goodwill | $4,181,616 | $4,181,179 | | Total intangible assets | $1,550,160 | $1,595,468 | Total Debt Principal (in thousands) | Metric | March 31, 2021 | December 31, 2020 | | :----- | :------------- | :---------------- | | Total principal | $5,962,966 | $6,023,870 | - In January 2021, the Zuffa First Lien Term Loan was refinanced into a New First Lien Term Loan, reducing the annual interest rate margin by **25 basis points** to 3.00% for LIBOR loans and the LIBOR floor by **25 basis points** to 0.75%[89](index=89&type=chunk) Revenue by Segment (in thousands) | Segment | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change (YoY) | | :------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Owned Sports Properties | $283,481 | $232,167 | +$51,314 (+22.1%) | | Events, Experiences & Rights | $539,610 | $668,776 | -$129,166 (-19.3%) | | Representation | $248,909 | $292,734 | -$43,825 (-15.0%) | | Total Consolidated Revenue | $1,069,582 | $1,190,397 | -$120,815 (-10.1%) | - Subsequent to March 31, 2021, the company acquired the path-to-college business of Reigning Champs, LLC for **$200 million** in cash and increased its purchase/guarantee agreements by **$1.3 billion**, due between 2021 and 2028[117](index=117&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a comprehensive discussion and analysis of Endeavor's financial condition and results of operations for the three months ended March 31, 2021 and 2020 [Business Overview](index=35&type=section&id=BUSINESS%20OVERVIEW) - Endeavor is a premium intellectual property, content, events, and experiences company, operating in three segments: **Owned Sports Properties**, **Events, Experiences & Rights**, and **Representation**[121](index=121&type=chunk)[122](index=122&type=chunk) - The Owned Sports Properties segment includes UFC (MMA organization), PBR (bull riding circuit), and a partnership with Euroleague (managing commercial business)[123](index=123&type=chunk)[124](index=124&type=chunk) - The Events, Experiences & Rights segment owns and operates over **800 live events annually**, distributes sports video programming and data, and operates IMG Academy[125](index=125&type=chunk)[126](index=126&type=chunk)[128](index=128&type=chunk) - The Representation segment provides services to over **7,000 talent and corporate clients** through WME, IMG Models, 160over90 (brand strategy/marketing), IMG Licensing, and Endeavor Content (content development/production)[129](index=129&type=chunk)[130](index=130&type=chunk) [Components of Our Operating Results](index=36&type=section&id=Components%20of%20Our%20Operating%20Results) - Revenue is primarily generated from media rights fees, pay-per-view, sponsorships, ticket sales, subscriptions, and license fees in Owned Sports Properties; media rights sales, production service fees, sponsorships, ticket/premium experience sales, subscriptions, streaming fees, tuition, profit sharing, and commissions in Events, Experiences & Rights; and commissions, packaging fees, marketing/consulting fees, production fees, and content licensing fees in Representation[131](index=131&type=chunk) - Direct operating costs include third-party expenses for event and experience production, content production costs, operation of training and education facilities, and fees for media rights[132](index=132&type=chunk) - Selling, general and administrative expenses primarily consist of personnel costs, rent, professional service costs, and other overhead[133](index=133&type=chunk) - Endeavor Operating Company is treated as a partnership for U.S. federal income tax purposes, while its U.S. and foreign corporate subsidiaries are subject to entity-level taxes[134](index=134&type=chunk) [Impact of the COVID-19 Pandemic](index=36&type=section&id=Impact%20of%20the%20COVID-19%20Pandemic) - The COVID-19 pandemic **significantly impacted** the company's business and operations starting March 2020, leading to a lack of ticketed events, postponements/cancellations of live events, stoppages in entertainment productions, and reduced corporate spending across all segments[135](index=135&type=chunk)[136](index=136&type=chunk) - The company recognized goodwill and intangible asset impairment charges, primarily in the Events, Experiences & Rights segment, and equity earnings were adversely impacted by weaker performance at Learfield IMG College due to COVID-19[140](index=140&type=chunk) - In response, the company implemented cost-saving initiatives including salary reductions, hiring freezes, furloughs, workforce reductions, reduced marketing spend, and cuts in travel, entertainment, capital expenditures, and acquisition activity[141](index=141&type=chunk) - Recovery is expected to be gradual, with continued uncertainty regarding the full impact on financial condition, liquidity, and future results; existing cash, cash from operations, and credit facilities are believed to be sufficient for the next year[142](index=142&type=chunk) [Results of Operations (Consolidated)](index=37&type=section&id=RESULTS%20OF%20OPERATIONS) Consolidated Results of Operations Summary | Metric | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | Change (YoY) | | :----- | :----------------------------------------------- | :----------------------------------------------- | :----------- | | Revenue | $1,069,582 | $1,190,397 | -$120,815 (-10.1%) | | Operating Income | $94,498 | $53,764 | +$40,734 (+75.8%) | | Net Income (Loss) | $2,376 | $(51,261) | +$53,637 | - Direct operating costs decreased by **$134.9 million (19.8%)** to $546.4 million, primarily due to reduced event costs from COVID-19 cancellations/postponements, partially offset by increased media rights costs[146](index=146&type=chunk) - Selling, general and administrative expenses decreased by **$7.9 million (2.0%)** to $381.1 million, driven by lower personnel costs, reduced travel, and other operating expenses due to COVID-19 related cost savings initiatives[147](index=147&type=chunk) - The provision for income taxes decreased by **$43.5 million** to $5.1 million, mainly due to a $32.3 million tax expense in Q1 2020 related to acquisitions and subsequent tax restructuring[153](index=153&type=chunk) - Net income attributable to non-controlling interests increased by **$23.6 million** to $27.2 million, primarily driven by the increase in net income attributable to UFC[155](index=155&type=chunk) [Segment Results of Operations](index=39&type=section&id=SEGMENT%20RESULTS%20OF%20OPERATIONS) Adjusted EBITDA by Segment (in thousands) | Segment | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change (YoY) | | :------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Owned Sports Properties | $145,549 | $102,294 | +$43,255 (+42.3%) | | Events, Experiences & Rights | $39,050 | $69,123 | -$30,073 (-43.5%) | | Representation | $61,483 | $68,613 | -$7,130 (-10.4%) | | Corporate | $(46,616) | $(54,492) | +$7,876 (+14.5%) | | Total Adjusted EBITDA | $199,466 | $185,538 | +$13,928 (+7.5%) | - Owned Sports Properties revenue increased by **$51.3 million (22.1%)** to $283.5 million, primarily due to increased media rights fees and event-related revenue at UFC[159](index=159&type=chunk) - Events, Experiences & Rights revenue decreased by **$129.2 million (19.3%)** to $539.6 million, mainly due to event cancellations and capacity restrictions, partially offset by increased media rights fees from the delayed 2020 soccer season[163](index=163&type=chunk) - Representation revenue decreased by **$43.8 million (15.0%)** to $248.9 million, attributed to the impact of COVID-19 on corporate spending and fewer content deliveries[167](index=167&type=chunk) [Non-GAAP Financial Measures](index=41&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) - Adjusted EBITDA is defined as net income (loss) excluding income taxes, net interest expense, depreciation and amortization, equity-based compensation, merger, acquisition and earn-out costs, certain legal costs, restructuring, severance and impairment charges, certain non-cash fair value adjustments, certain equity earnings, COVID-19 related expenses, and certain other items[169](index=169&type=chunk) - Adjusted Net Income is defined as net income (loss) attributable to Endeavor Operating Company adjusted to exclude the company's share of the adjustments used to calculate Adjusted EBITDA (other than income taxes, net interest expense, and depreciation), on an after-tax basis, the release of tax valuation allowances, and other tax items[171](index=171&type=chunk) Adjusted EBITDA Reconciliation (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :----- | :-------------------------------- | :-------------------------------- | | Net income (loss) | $2,376 | $(51,261) | | Provision for income taxes | 5,085 | 48,604 | | Interest expense, net | 68,351 | 69,984 | | Depreciation and amortization | 67,236 | 80,447 | | Equity-based compensation expense | 16,491 | 7,771 | | Merger, acquisition and earn-out costs | 10,985 | 10,162 | | Certain legal costs | 3,952 | 2,802 | | Restructuring, severance and impairment | 407 | 16,942 | | Fair value adjustment - equity investments | (7,799) | 2,809 | | Equity method losses - Learfield IMG College | 18,805 | 11,756 | | COVID-19 related costs | — | 210 | | Other | 13,577 | (23,985) | | **Adjusted EBITDA** | **$199,466** | **$176,241** | | Net income (loss) margin | 0.2% | (4.3)% | | Adjusted EBITDA margin | 18.6% | 14.8% | [Liquidity and Capital Resources](index=44&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) - The company's historical liquidity sources include cash flows from operations, equity contributions from pre-IPO institutional investors, and the issuance of long-term debt[177](index=177&type=chunk) - As of March 31, 2021, the company had **$5.6 billion** in outstanding indebtedness under its Senior Credit Facilities (Credit Facilities and UFC Credit Facilities), with approximately **$311 million** in available borrowing capacity[178](index=178&type=chunk) Cash Flows Overview (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :----- | :-------------------------------- | :-------------------------------- | | Net cash (used in) provided by operating activities | $(70,830) | $92,522 | | Net cash provided by (used in) investing activities | $7,610 | $(351,779) | | Net cash (used in) provided by financing activities | $(77,843) | $313,884 | - Primary liquidity needs include funding organic growth, acquisitions, operating expenses, capital expenditures, debt service, payments under the tax receivable agreement, income taxes, employee equity repurchases, distributions, the UFC Buyout, and an expected **$600 million debt reduction** in Q3 2021[187](index=187&type=chunk) - The Tax Receivable Agreement requires payments to Post-IPO TRA Holders equal to **85% of realized tax savings** from favorable tax attributes, with future payments potentially substantial and subject to acceleration under certain conditions[190](index=190&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section discusses the company's exposure to market risks, primarily interest rate risk and foreign currency risk, and the strategies used to manage them - The company's exposure to changes in interest rates primarily relates to the floating interest component on its long-term debt; a **1% increase** in effective interest rates would have increased interest expense by **$41 million** for the three months ended March 31, 2021, holding debt levels constant[196](index=196&type=chunk) - The elimination of certain LIBOR tenors by the end of 2021 and June 2023 will impact loans benchmarked off these rates, with the new standard benchmark rate being SOFR, though the full impact is currently unquantifiable[197](index=197&type=chunk) - Foreign currency risk arises from operations in several countries, principally in British Pound and Euro; a **10% appreciation** of the U.S. dollar against these foreign currencies would have decreased revenues by approximately **$38.2 million** and improved operating income by approximately **$3.1 million** for the three months ended March 31, 2021[198](index=198&type=chunk)[199](index=199&type=chunk) - The company uses foreign currency forward exchange contracts and interest rate swaps to hedge against potential adverse fluctuations in foreign currency exchange rates and interest rates, not for speculative purposes[200](index=200&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated disclosure controls and procedures as of March 31, 2021, concluding they were effective, with no material changes in internal control over financial reporting - The company's management, with the participation of the chief executive officer and chief financial officer, concluded that disclosure controls and procedures were **effective at the reasonable assurance level** as of March 31, 2021[202](index=202&type=chunk) - There were **no changes** in internal control over financial reporting during the three months ended March 31, 2021, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[203](index=203&type=chunk) - Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving desired control objectives, and judgment is applied in evaluating benefits relative to costs[201](index=201&type=chunk) [Part II – Other Information](index=50&type=section&id=Part%20II%20%E2%80%93%20OTHER%20INFORMATION) This part provides additional information including legal proceedings, risk factors, unregistered sales of equity securities, use of proceeds, and a list of exhibits [Item 1. Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, claims, and governmental investigations in the normal course of business, and intends to vigorously defend against them - An employee is named in a complaint by India's Director of Enforcement for alleged violations of the Foreign Exchange Management Act (FEMA) related to client transactions in 2009[113](index=113&type=chunk) - The Italian Competition Authority (ICA) investigated alleged breaches of competition law in Italy concerning media rights for Serie A and Serie B football leagues, resulting in a **EUR 0.3 million fine** in May 2019; subsequently, football clubs and the Serie A league filed claims against IMG and others, seeking aggregate damages totaling over **EUR 2.4 billion**[114](index=114&type=chunk) - Zuffa (UFC) is facing five related class-action lawsuits alleging monopolization of the market for elite professional MMA bouts and fighter services, seeking treble damages and injunctive relief; the District Court indicated an intention to certify the 'Bout Class'[114](index=114&type=chunk) - In February 2021, the company signed new franchise agreements with the Writer's Guild of America (WGA), prohibiting packaging deals after June 30, 2022, and limiting non-controlling ownership in Restricted Production Entities to **20%**[114](index=114&type=chunk) [Item 1A. Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) This section details substantial risks associated with investing in the company's Class A common stock, categorized into business, organizational, stock, and tax-related risks [Risks Related to Our Business](index=50&type=section&id=Risks%20Related%20to%20Our%20Business) - The COVID-19 global pandemic continues to **materially and adversely affect** the company's business, financial condition, and results of operations due to ongoing restrictions, event cancellations, and changes in consumer behavior[207](index=207&type=chunk)[208](index=208&type=chunk)[210](index=210&type=chunk) - The company's revenue is highly sensitive to rapidly changing consumer preferences and industry trends, requiring successful adaptation to new content distribution platforms and technologies[214](index=214&type=chunk)[217](index=217&type=chunk) - Success depends substantially on maintaining a professional reputation and the relationships of agents, managers, and other key personnel with clients; adverse publicity or loss of key talent could significantly harm the business[218](index=218&type=chunk)[220](index=220&type=chunk)[221](index=221&type=chunk) - The company's business involves potential internal conflicts of interest due to its broad platform, which, if not adequately managed, could adversely affect its reputation and client relationships[224](index=224&type=chunk) - Rapid growth through acquisitions presents integration challenges, and failure to realize anticipated benefits or effectively manage future growth could adversely affect the business[232](index=232&type=chunk)[233](index=233&type=chunk) - The company is subject to extensive U.S. and foreign governmental regulations (e.g., labor, tax, anti-corruption, data privacy, licensing), and non-compliance could result in fines, legal proceedings, and reputational harm[235](index=235&type=chunk)[236](index=236&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk) - Being a signatory to certain franchise agreements of unions and guilds, and collective bargaining agreements, exposes the company to risks of work stoppages, increased costs, or loss of client representation if agreements expire or disputes arise (e.g., with the WGA)[257](index=257&type=chunk)[259](index=259&type=chunk) [Risks Related to Our Organization and Structure](index=63&type=section&id=Risks%20Related%20to%20Our%20Organization%20and%20Structure) - As a holding company, Endeavor Group Holdings is dependent upon distributions from Endeavor Operating Company to pay taxes and other expenses, which may be restricted by applicable laws, regulations, or covenants in debt facilities[263](index=263&type=chunk)[264](index=264&type=chunk) - Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders collectively control approximately **89.5% of the combined voting power**, allowing them to control major corporate actions, potentially with interests that differ from minority stockholders[266](index=266&type=chunk)[268](index=268&type=chunk) - The company has a substantial amount of indebtedness (**$5.6 billion** as of March 31, 2021), which requires significant cash flow for service and refinancing, increasing vulnerability to adverse economic conditions and potentially limiting future financing[271](index=271&type=chunk)[272](index=272&type=chunk) - Restrictive covenants in the Senior Credit Facilities limit the company's ability to pursue certain business strategies, including asset dispositions, mergers, dividends, and other payments, and non-compliance could lead to accelerated debt repayment[273](index=273&type=chunk)[275](index=275&type=chunk) - The Tax Receivable Agreement requires the company to pay certain pre-IPO investors **85% of realized tax savings** from favorable tax attributes, with future payments potentially substantial and subject to acceleration upon certain events, which could negatively impact liquidity[279](index=279&type=chunk)[281](index=281&type=chunk) - The company is exempt from certain corporate governance requirements as a **'controlled company'** due to concentrated control, which reduces protections afforded to stockholders of fully compliant companies[277](index=277&type=chunk) [Risks Related to Our Class A Common Stock](index=70&type=section&id=Risks%20Related%20to%20Our%20Class%20A%20Common%20Stock) - Future sales of a substantial number of Class A common stock, including shares issuable upon redemption rights and equity awards, or the perception of such sales, could **depress the stock price** and impair the company's ability to raise capital[282](index=282&type=chunk)[287](index=287&type=chunk) - The market price for Class A common stock may be **volatile** due to various factors, including consumer trends, economic conditions, operating performance, public announcements, analyst ratings, and broader market movements, potentially leading to significant price fluctuations[289](index=289&type=chunk) - The company **does not expect to pay any cash dividends** for the foreseeable future, intending to retain all future earnings for business operations and expansion[291](index=291&type=chunk) - Provisions in the company's organizational documents, such as the multiple share class capital structure, classified board, and advance notice requirements, may **delay or prevent a third-party acquisition** without board approval[293](index=293&type=chunk)[294](index=294&type=chunk) - If Class C common stock is issued in the future, holders of Class A common stock will not be entitled to receive excess economic consideration over Class C holders in a merger, consolidation, or tender/exchange offer, potentially resulting in a lesser payment[295](index=295&type=chunk) [Risks Related to Tax Matters](index=75&type=section&id=Risks%20Related%20to%20Tax%20Matters) - Tax matters may cause **significant variability** in financial results due to changing tax rates, projected taxable income levels, valuation allowances, tax audits, and changes in tax laws and their interpretations[299](index=299&type=chunk) - New partnership audit rules may require Endeavor Operating Company to pay additional taxes, interest, and penalties at the entity level, with the economic burden potentially borne by current holders[300](index=300&type=chunk)[301](index=301&type=chunk) - The tax classification of Endeavor Operating Company as a partnership could be challenged, leading to materially different tax consequences[302](index=302&type=chunk) - The company may be required to fund withholding tax upon certain exchanges of Endeavor Operating Company Units by non-U.S. holders, potentially necessitating additional indebtedness or stock sales[303](index=303&type=chunk) - As the successor to merged entities, Endeavor Group Holdings may incur certain tax liabilities attributable to its pre-IPO investors and Other UFC Holders, which could adversely affect liquidity and financial condition[304](index=304&type=chunk) [General Risk Factors](index=76&type=section&id=General%20Risk%20Factors) - The company may face labor shortages, making it difficult and expensive to attract, train, and retain qualified employees, contingent workers, and volunteers, which could adversely impact events and productions[306](index=306&type=chunk)[307](index=307&type=chunk) - Exchange rate fluctuations, particularly between the U.S. Dollar and foreign currencies like the British Pound and Euro, may cause currency translation losses or gains, affecting operating results[308](index=308&type=chunk) - Costs associated with obtaining and maintaining insurance, along with the adequacy of coverage limits for property, casualty, liability, and business interruption losses, could adversely affect profitability, especially given heightened concerns from events like the COVID-19 pandemic[309](index=309&type=chunk) - The trading market for Class A common stock depends on research and reports from securities or industry analysts; a lack of coverage or unfavorable research could depress the stock price and trading volume[310](index=310&type=chunk) - Future changes to U.S. and foreign tax laws, including those related to multinational corporations, could adversely affect worldwide tax liabilities, business, financial condition, and results of operations[311](index=311&type=chunk)[312](index=312&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=78&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the use of proceeds from the company's IPO and concurrent private placements, and describes recent unregistered sales of equity securities - The company received estimated net proceeds of **$1,887.1 million** from its IPO (including the over-allotment option) and concurrent private placements, after deducting underwriting discounts, commissions, and other expenses[313](index=313&type=chunk) - Of the net proceeds, **$835.7 million** was used to purchase Endeavor Operating Company Units (or UFC Parent interests) from certain Other UFC Holders[313](index=313&type=chunk) - **$1,053.1 million** of the proceeds was contributed to Endeavor Manager (and subsequently to Endeavor Operating Company) for working capital, general corporate purposes, an expected **$600 million debt reduction** in Q3 2021, and potential future joint ventures, investments, or acquisitions[187](index=187&type=chunk)[313](index=313&type=chunk) - A private placement of **75,584,747 shares** of Class A common stock at $24.00 per share occurred simultaneously with the IPO, generating aggregate proceeds of **$1,814.0 million** ($1,377.0 million to the company and $437.0 million to affiliates of KKR)[314](index=314&type=chunk) [Item 6. Exhibits](index=79&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report, including various agreements, employment contracts, equity award plans, and required certifications - Key agreements filed include the Transaction Agreement, Stockholders Agreement, Registration Rights Agreement, Tax Receivable Agreement, and Amended and Restated Limited Liability Company Agreements for Endeavor Operating Company, LLC and Endeavor Manager, LLC[316](index=316&type=chunk)[320](index=320&type=chunk) - The exhibits also list term employment agreements for several executives and various equity award agreements under the Endeavor Group Holdings, Inc. 2021 Incentive Award Plan[322](index=322&type=chunk)[323](index=323&type=chunk)[324](index=324&type=chunk)[325](index=325&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer, as required by the Sarbanes-Oxley Act, are included, along with XBRL Instance, Schema, Calculation, Definition, Label, and Presentation Linkbase Documents[327](index=327&type=chunk)[328](index=328&type=chunk) [Signatures](index=83&type=section&id=SIGNATURES) This section contains the official signatures of the registrant, Endeavor Group Holdings, Inc, certifying the report as of June 2, 2021 - The report is signed by Ariel Emanuel, Chief Executive Officer (Principal Executive Officer), and Jason Lublin, Chief Financial Officer (Principal Financial Officer)[332](index=332&type=chunk) - The report was signed on June 2, 2021[333](index=333&type=chunk)