TKO (TKO) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In 2024, the company generated revenue of $2.804 billion and adjusted EBITDA of$ 1.251 billion, both exceeding revised guidance [22] - For the fourth quarter, revenue was $642 million, adjusted EBITDA was$ 238 million, and adjusted EBITDA margin was 37%, reflecting a 5% increase in revenue and a 7% increase in adjusted EBITDA year-over-year [26][32] - The adjusted EBITDA margin for the full year was 45%, with a 300 basis point increase compared to the previous year [22][24] Business Line Data and Key Metrics Changes - The UFC segment generated revenue of $344 million in Q4, a 22% increase, with adjusted EBITDA of$ 178 million, up 25% [26] - The WWE segment reported revenue of $298 million in Q4, a 10% decrease, with adjusted EBITDA of$ 114 million, down 19% [32] - Sponsorship revenue for UFC grew 28% year-over-year, while WWE's sponsorship revenue increased by 20% [15] Market Data and Key Metrics Changes - UFC had record-breaking ticket sales and attendance, with 10 all-time highest grossing events in 2024 [12] - WWE's live events revenue increased 13% to $93 million, driven by strong ticket sales [34] - NXT viewership increased by 12% compared to USA's 2024 average, with a nearly 100% increase in viewership on CW [10][11] Company Strategy and Development Direction - The company is focused on integrating UFC and WWE to drive efficiency and maximize shareholder value, with a priority on domestic rights renewals [16][19] - Plans to close acquisitions of IMG, On Location, and PBR in Q1 2025, which are expected to enhance the global sports portfolio [17][51] - The strategy includes expanding audience reach and deepening partnerships while maximizing revenue across multiple business lines [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining positive momentum in 2025, targeting revenue of$ 2.93 billion to $3.0 billion and adjusted EBITDA of$ 1.35 billion to $1.39 billion [44] - The company anticipates challenges due to the timing of events, particularly with the shift of a major event to Saudi Arabia, impacting revenue by approximately$ 55 million [46] - Management remains optimistic about the demand for premium live sports and entertainment, with no signs of a slowdown in ticket sales or viewership [90] Other Important Information - The company generated $509 million of free cash flow in 2024, with a free cash flow conversion rate of 41% [38] - A share repurchase program of up to$ 2 billion was authorized, along with a quarterly cash dividend of $0.38 per share [41][43] - The company is focused on realizing revenue synergies and cost savings as part of its integration strategy [24] Q&A Session Summary Question: UFC domestic deals and negotiation with Disney - Management confirmed they are in an exclusive negotiating window with Disney and ESPN, emphasizing the strong market for premium content [63][64] Question: Potential repeal of the Ali Act and boxing plans - Management acknowledged the flaws in the Ali Act but expressed confidence in the opportunities for boxing, indicating ongoing discussions for a boxing league with Saudi Arabia [67][78] Question: Live event revenue growth outlook - Management expects meaningful growth in live event revenue for 2025, driven by major events and site fee growth [86][88] Question: Sponsorship opportunities and growth - Management is optimistic about achieving$ 375 million in sponsorship revenue for the year, with significant opportunities for new partnerships [104][107] Question: Incremental UFC events abroad and margin implications - Management indicated that while international events may have lower margins, they are viewed as overall EBITDA accretive in the long term [120]