01—Abstract
Summary
Summary of the 10-Q filed May 8, 2024. Cited figures are marked; the original filing is the authoritative source.
TKO Group Holdings, Inc. reported a first quarter 2024 net loss of $249.5 milliona on revenue of $629.7 million, compared with net income of $87.95 million on revenue of $306.7 million in the first quarter of 2023.
The period reflects the September 12, 2023 combination of the UFC and WWE businesses, which is accounted for as a reverse acquisition of WWE. Operating loss was $210.3 millionb, driven largely by $335.0 million of legal costs tied to the settlement of UFC antitrust lawsuits and $107.2 million of depreciation and amortization. Net loss attributable to TKO Group Holdings, Inc. was $103.8 million, or $1.26 per share of Class A common stock.
Adjusted EBITDA was $282.2 millionc, compared with $172.6 million a year earlier, with the UFC segment contributing $195.1 million and the WWE segment $140.2 million. The balance sheet shows total assets of $12.72 billion, total liabilities of $4.09 billion, and total long-term debt of $2.71 billion, primarily a first lien term loan with $2.7 billion outstanding. Cash and cash equivalents rose to $245.8 million.
Accrued liabilities increased to $405.7 milliond, including $200.0 million of legal settlements expected to be paid within twelve months, and other long-term liabilities rose to $137.9 million, reflecting the remaining $135.0 million of the settlement due in April 2025. Operating cash flow was $59.3 million, and cash used in investing activities was $36.2 million. Subsequent to quarter end, the company borrowed $150.0 million under its revolving credit facility to fund share repurchases in the second quarter of 2024, and amended the credit agreement to extend the revolver's maturity to October 29, 2025.
Remaining exposures include WWE-related regulatory inquiries, a lawsuit alleging sexual assault by a former executive, and consolidated Delaware stockholder litigation tied to the Transactions, all at an early stage. Management concluded that disclosure controls were effective as of March 31, 2024.
02—Key points
Key Highlights
- Revenue rose to $629.7 million from $306.7 million, reflecting the first full quarter contribution of WWE, which generated $316.7 million, while UFC revenue was $313.0 million.
- Net loss was $249.5 million, driven by a $335.0 million legal settlement for UFC antitrust lawsuits recorded in selling, general and administrative expenses, against net income of $87.95 million in the prior-year quarter.
- Net loss attributable to TKO Group Holdings, Inc. was $103.8 million, or $1.26 per basic and diluted share of Class A common stock.
- Adjusted EBITDA increased to $282.2 million from $172.6 million, with UFC at $195.1 million, WWE at $140.2 million, and Corporate at $(53.1) million.
- Depreciation and amortization rose to $107.2 million from $15.2 million, mainly due to $91.8 million of expenses associated with the WWE acquisition.
- Total remaining performance obligations were $8.13 billion, including $1.54 billion for the remainder of 2024.
- Total debt was $2.73 billion, with the First Lien Term Loan due April 2026 and a $205.0 million revolving credit facility undrawn at March 31, 2024; $150.0 million was borrowed in April 2024 to fund share repurchases.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed May 8, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $1.22B$306.73M | +298.5% |
| SG&A Expenses | $668.31M$56.35M | +1086.1% |
| Operating Expenses | $1.40B$160.65M | +769.0% |
| Operating Income | -$173.58M$146.08M | −218.8% |
| Interest Expense | $61.18M$53.91M | +13.5% |
| Net Income | -$103.84M$87.95M | −218.1% |
| EPS (Basic) | $-1.26— | — |
| EPS (Diluted) | $-1.26— | — |
| Shares Outstanding (Basic) | 82.35M— | — |
| Shares Outstanding (Diluted) | 82.35M— | — |
05—Questions
Frequently Asked Questions
Why did TKO report a large net loss this quarter?
The net loss of $249.5 million was mainly driven by a $335.0 million charge for the settlement of UFC antitrust lawsuits, recorded in selling, general and administrative expenses. Depreciation and amortization of $107.2 million, largely from the WWE acquisition, and interest expense of $64.5 million also contributed.
How did the WWE combination affect TKO's results?
WWE contributed $316.7 million of revenue and $140.2 million of Adjusted EBITDA in the quarter. The Transactions were accounted for as a reverse acquisition of WWE, and the prior-year quarter included no WWE results.
What are the remaining legal obligations related to the UFC antitrust settlement?
The $335.0 million settlement is payable in installments, with $200.0 million expected within twelve months of March 31, 2024 and $135.0 million expected in April 2025. The settlement is subject to court approval, and the company anticipates it will be deductible for tax purposes.
How is TKO's debt position and liquidity?
Total debt was $2.73 billion at March 31, 2024, mostly a First Lien Term Loan due April 2026 with $2.7 billion outstanding. Cash and cash equivalents were $245.8 million, and the $205.0 million revolving credit facility was undrawn at quarter end. Management believes these sources will be sufficient for at least the next 12 months.
What other legal matters could affect TKO?
WWE has received regulatory, investigative and enforcement inquiries related to former CEO Vincent K. McMahon. A lawsuit filed in January 2024 alleges sexual assault and asserts Trafficking Victims Protection Act claims. Delaware stockholder class actions tied to the Transactions have been consolidated and are at an early stage.
06—Continue