01—Abstract
Summary
Summary of the 10-Q filed August 8, 2024. Cited figures are marked; the original filing is the authoritative source.
TKO Group Holdings, Inc. reported second-quarter 2024 revenue of $851.2 milliona for the three months ended June 30, 2024, up from $305.2 million a year earlier, and $1,480.9 million for the six months, up from $611.9 million.
The comparison is distorted by the September 12, 2023 combination of the UFC and WWE businesses, with WWE contributing $456.8 millionb of revenue in the quarter. Net income attributable to TKO Group Holdings, Inc. was $59.1 million for the quarter, while the six-month figure was a loss of $44.7 million, largely reflecting a $335.0 million legal settlement related to the UFC antitrust lawsuits recorded in selling, general and administrative expenses. Consolidated Adjusted EBITDA was $420.9 million for the quarter and $703.1 million for the six months.
The company's balance sheet shows total assets of $12.72 billionc at June 30, 2024, including goodwill of $7.67 billion and intangible assets of $3.40 billion, against total liabilities of $4.09 billion. Total debt was $2.73 billion, consisting mainly of a first lien term loan due April 2026. During the second quarter, TKO repurchased 1,853,724 Class A shares from Vincent K.
McMahon for $165.0 milliond, funded with about $150.0 million of revolver borrowings and cash on hand; the revolver was fully repaid in June 2024. Cash and cash equivalents rose to $277.5 million, and operating cash flow was $290.0 million for the six months.
The filing also discloses ongoing legal matters, including the UFC antitrust settlement, which the court denied preliminary approval of on July 30, 2024, and a consolidated WWE merger litigation in Delaware. The company stated it is evaluating its options, including an appeal, and has begun settlement discussions with plaintiffs' counsel for the Le and Johnson cases.
02—Key points
Key Highlights
- Revenue was $851.2 million for the three months ended June 30, 2024 versus $305.2 million a year earlier, and $1,480.9 million for the six months versus $611.9 million, reflecting the inclusion of WWE following the September 2023 Transactions.
- WWE segment contributed $456.8 million of revenue for the quarter; UFC segment revenue was $394.4 million.
- Net income attributable to TKO Group Holdings, Inc. was $59.1 million for the quarter, but a net loss of $44.7 million for the six months, driven by a $335.0 million UFC antitrust legal settlement charge.
- Consolidated Adjusted EBITDA was $420.9 million for the quarter and $703.1 million for the six months ended June 30, 2024.
- Repurchased 1,853,724 Class A shares from Vincent K. McMahon for $165.0 million, funded with approximately $150.0 million of revolver borrowings and cash on hand; the revolver borrowing was fully repaid in June 2024.
- Total debt was $2.73 billion at June 30, 2024, primarily a first lien term loan due April 2026; the company expects to refinance before maturity.
- The UFC antitrust settlement was denied preliminary approval by the court on July 30, 2024, after the period end, and the company is evaluating options including appeal.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed August 8, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $1.19B$305.19M | +291.0% |
| SG&A Expenses | $368.19M$63.48M | +480.0% |
| Operating Expenses | $1.08B$161.31M | +568.5% |
| Operating Income | $114.86M$143.87M | −20.2% |
| Interest Expense | $62.98M$57.90M | +8.8% |
| Net Income | $59.11M$81.85M | −27.8% |
| EPS (Basic) | $0.73— | — |
| EPS (Diluted) | $0.72— | — |
| Shares Outstanding (Basic) | 80.88M— | — |
| Shares Outstanding (Diluted) | 81.85M— | — |
05—Questions
Frequently Asked Questions
Why did TKO's revenue and expenses rise so sharply compared with the prior year?
The September 12, 2023 Transactions combined UFC and WWE, and the filing reports WWE results only from that date. The prior-year quarter therefore includes only UFC, which is why revenue rose from $305.2 million to $851.2 million for the three months ended June 30, 2024. Selling, general and administrative expenses also rose substantially, including the $335.0 million legal settlement recorded in the six-month period.
What drove the net loss for the six months ended June 30, 2024?
The filing shows a net loss attributable to TKO Group Holdings, Inc. of $44.7 million for the six months, compared with net income in the three-month period of $59.1 million. The main contributor was the $335.0 million charge for the settlement of the UFC antitrust lawsuits, which is included in selling, general and administrative expenses and in the Certain legal costs adjustment.
What is the status of the UFC antitrust settlement?
The settlement, for an aggregate of $335.0 million, was submitted for preliminary approval in March 2024. On July 30, 2024, the court denied the motion for preliminary approval and said an opinion would follow later. A status conference is scheduled for August 19, 2024 and a tentative trial date for the Le case is October 28, 2024. The company is evaluating its options, including an appeal, and has started separate settlement discussions with plaintiffs' counsel.
How did TKO use its cash and borrowings during the period?
Financing activities used $199.3 million in the six months, including $165.0 million for share repurchases, $12.3 million in distributions to members, and net debt repayments. Operating activities provided $290.0 million, aided by a $310.8 million increase in accounts payable and accrued liabilities that includes the $335.0 million settlement accrual. Cash and cash equivalents ended the period at $277.5 million.
What is the company's debt position and refinancing outlook?
Total debt was $2.73 billion at June 30, 2024, mainly a first lien term loan with about $2.7 billion outstanding that matures April 29, 2026 and bears interest at adjusted SOFR plus 2.75-3.00%, which totaled 8.34% as of June 30, 2024. The revolving credit facility's maturity was extended to October 29, 2025, and there were no borrowings outstanding at June 30, 2024. The company expects to refinance the Credit Facilities before the 2026 maturity.
06—Continue