01—Abstract
Summary
Summary of the 10-Q filed November 6, 2024. Cited figures are marked; the original filing is the authoritative source.
TKO Group Holdings, Inc. reported third-quarter 2024 revenue of $681.3 milliona, up from $449.1 million a year earlier, and nine-month revenue of $2.16 billion versus $1.06 billion, reflecting a full period of WWE results following the September 12, 2023 Transactions.
Operating income for the quarter was $136.4 millionb and net income attributable to TKO Group Holdings, Inc. was $23.1 million. For the nine months, the company reported a net loss attributable to TKO Group Holdings, Inc. of $21.6 million, driven primarily by a $375.0 million charge for the settlement of UFC antitrust lawsuits (the Le case) recorded in selling, general and administrative expenses. Adjusted EBITDA was $310.0 million for the quarter and $1.01 billion for the nine months.
Cash and cash equivalents rose to $457.4 millionc at September 30, 2024, from $235.8 million at December 31, 2023. Operating cash flow for the nine months was $526.6 million, and the company repurchased $165.0 million of Class A common stock from Vincent K. McMahon in the second quarter.
Total long-term debt, including current portion, was $2.72 billiond, consisting mainly of a First Lien Term Loan due April 2026. The $375.0 million settlement is payable in installments, with $125.0 million paid into escrow in late October 2024 and two payments covering the remaining $250.0 million expected in 2025.
Subsequent events include a definitive agreement announced October 23, 2024 to acquire the Professional Bull Riders, On Location and IMG businesses from Endeavor for total consideration of $3.25 billion, expected to close in the first half of 2025. The board also authorized a share repurchase program of up to $2.0 billion of Class A common stock and a quarterly cash dividend program of $75.0 million, with dividend payments intended to begin March 31, 2025.
02—Key points
Key Highlights
- Q3 2024 revenue of $681.3 million, up from $449.1 million in Q3 2023; nine-month revenue of $2,162.1 million versus $1,061.0 million, driven by WWE's inclusion since September 12, 2023.
- Nine-month net loss attributable to TKO Group Holdings, Inc. of $21.6 million, including a $375.0 million UFC antitrust settlement charge; Q3 2024 net income attributable to TKO was $23.1 million.
- Q3 2024 Adjusted EBITDA of $310.0 million (46% margin) versus $239.7 million in Q3 2023; WWE segment Adjusted EBITDA was $175.3 million in the quarter versus $22.0 million in the prior-year period from acquisition.
- Nine-month operating cash flow of $526.6 million, compared with $247.7 million a year earlier, aided by a $375.0 million accrued settlement that had not yet been paid.
- Cash and cash equivalents of $457.4 million at September 30, 2024, up from $235.8 million at December 31, 2023; total debt principal of $2,736.2 million, mainly the First Lien Term Loan due April 2026.
- Subsequent event: agreement to acquire PBR, On Location and IMG businesses from Endeavor for $3.25 billion, with Endeavor expected to own approximately 59% of TKO upon completion.
- Board authorized a share repurchase program of up to $2.0 billion of Class A common stock and a quarterly dividend program of $75.0 million, with dividends intended to begin March 31, 2025.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed November 6, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $1.54B$449.06M | +243.1% |
| SG&A Expenses | $379.60M$193.21M | +96.5% |
| Operating Expenses | $1.51B$355.22M | +324.0% |
| Operating Income | $34.63M$93.84M | −63.1% |
| Interest Expense | $59.43M$60.64M | −2.0% |
| Net Income | $23.14M-$21.89M | +205.7% |
| EPS (Basic) | $0.29$-0.26 | +211.5% |
| EPS (Diluted) | $0.28$-0.26 | +207.7% |
| Shares Outstanding (Basic) | 80.97M83.16M | −2.6% |
| Shares Outstanding (Diluted) | 171.60M83.16M | +106.3% |
05—Questions
Frequently Asked Questions
Why did TKO report a net loss for the nine months ended September 30, 2024?
The nine-month net loss attributable to TKO Group Holdings, Inc. of $21.6 million was driven largely by selling, general and administrative expenses of $1,004.1 million, which include a $375.0 million charge for the settlement of the UFC antitrust lawsuits. The company also recorded depreciation and amortization of $309.1 million, largely from the WWE acquisition. The filing reports a pretax loss of $10.0 million for the nine months.
How much of the UFC antitrust settlement has been paid, and when will the rest be paid?
The company paid $125.0 million of the aggregate $375.0 million settlement into escrow in late October 2024 following preliminary court approval. It expects to make two payments covering the remaining $250.0 million in 2025. The settlement amount is expected to be tax deductible.
What is the Endeavor Asset Acquisition and how will it affect shareholders?
TKO agreed to acquire the Professional Bull Riders, On Location and IMG businesses from Endeavor subsidiaries for total consideration of $3.25 billion, based on the 25-trading-day volume-weighted average price of TKO Class A stock ending October 23, 2024. Endeavor would receive about 26.1 million TKO OpCo common units and an equal number of Class B shares. The filing states that the issuance would reduce other stockholders' equity ownership and voting power by approximately 6% each. The transaction is expected to close in the first half of 2025.
What capital return programs did TKO announce?
On October 24, 2024, TKO's board authorized a share repurchase program of up to $2.0 billion of Class A common stock, with no expiration and an expected completion period of about three to four years. It also approved a quarterly cash dividend program with $75.0 million of expected quarterly distributions from TKO OpCo, with the first payments intended for March 31, 2025. The share repurchase authorization is not conditional on closing the Endeavor Asset Acquisition.
What debt obligations does TKO have and when do they mature?
As of September 30, 2024, total debt principal was $2,736.2 million, including a First Lien Term Loan of $2,705.5 million due April 2026, and secured commercial loans of $30.7 million due November 2028. The $205.0 million revolving credit facility had no borrowings outstanding at quarter end and its maturity was extended to October 29, 2025. The company expects to refinance the Credit Facilities before their 2026 maturity.
06—Continue