Financial Data and Key Metrics Changes - TKO generated reported revenue of $1.675 billion for the full year 2023, with net income of $176 million and adjusted EBITDA of $809 million [39] - Combined revenue, including WWE activity, was $2.619 billion, an increase of 8% compared to $2.432 billion in the prior year [39] - Combined adjusted EBITDA was $1.092 billion for 2023, also an increase of 8%, with an adjusted EBITDA margin of 42% for both periods [39] Business Line Data and Key Metrics Changes - UFC segment revenue increased 13% to $1.292 billion, with adjusted EBITDA of $756 million, an increase of 11% [57] - Live events revenue for TKO increased 34% to $168 million, driven by five additional events with live audiences [40] - WWE segment combined revenue increased 3% to $1.326 billion, with combined adjusted EBITDA of $533 million, an increase of 4% [41] Market Data and Key Metrics Changes - Media rights and content revenue increased 10% to $871 million, primarily due to higher domestic and international rights fees [16] - Average viewership for UFC's pay-per-view prelims grew 35% over 2022, marking the highest ever average viewership on ESPN's networks [27] - WWE's Royal Rumble attracted over 48,000 fans, setting a venue record and the largest gate for any premium live event outside of WrestleMania [29] Company Strategy and Development Direction - TKO is focused on leveraging the combination of UFC and WWE to drive revenue growth and margin expansion, with significant potential in global partnerships [24][23] - The company has secured a transformative partnership with Netflix, worth approximately $5.2 billion over ten years, to bring WWE's flagship program to a global audience [22] - TKO aims to capitalize on the evolving media landscape and enhance fan engagement through strategic partnerships and content distribution [37] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting strong demand for premium content and live events, with expectations for continued growth in 2024 [54] - The company anticipates revenue of $2.575 billion to $2.650 billion and adjusted EBITDA of $1.15 billion to $1.17 billion for 2024, driven by growth in partnership sales and licensing agreements [42] - Management acknowledged the impact of the current economic environment on cash flow generation and net leverage, with a focus on maintaining a strong financial position [81] Other Important Information - TKO's corporate expenses were $196 million for the full year, reflecting general and administrative operations supporting both segments [62] - The company ended the year with $2.761 billion in debt and $236 million in cash, having repurchased 1.3 million shares for $100 million [65] - TKO expects to realize annualized net savings of $50 million to $100 million from identified run rate savings opportunities [56] Q&A Session Summary Question: What excites the company about the Netflix deal? - Management expressed excitement about the global reach and strategic benefits of the Netflix partnership, viewing it as a transformative deal for the company [70] Question: Clarification on Q4 revenue guidance? - Management confirmed that Q4 guidance excludes any income from Raw, which is estimated at approximately $75 million [73] Question: Impact of Netflix on international brand extension? - Management indicated that Netflix will have rights to all international territories as they become available, enhancing global brand presence [101] Question: Cost savings from having one partner for programming? - Management confirmed that sun-setting the WWE Network is part of the plan, which will yield cost savings when transitioning to a licensed model [141] Question: Thoughts on the sports rights landscape? - Management expressed confidence in the value of their premium content and the competitive landscape for sports rights, anticipating strong demand [118]
TKO (TKO) - 2023 Q4 - Earnings Call Transcript