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TKO Group Holdings 8-K Report, Financial Results (Feb 27, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed February 27, 2024
Period End
February 27, 2024
Security
TKO
In the record · 2023–202610-K310-Q98-K42

TKO filed 3 annual reports (10-K), 9 quarterly reports (10-Q) and 42 current reports (8-K) between 2023 and 2026.

  1. Material agreement8-K · Nov ’23Nov ’23
  2. Auditor change8-K · Aug ’24Aug ’24
  3. Change in control8-K · Mar ’25Mar ’25
  4. Material agreement8-K · Mar ’26Mar ’26

01—Abstract

Summary

Summary of the 8-K filed February 27, 2024. Cited figures are marked; the original filing is the authoritative source.

TKO Group Holdings, Inc. filed this Form 8-K on February 27, 2024 to furnish its results for the year ended December 31, 2023, along with historical financial information for UFC and WWE for fiscal 2022 and 2023.

The company was formed by the combination of UFC and WWE, which closed on September 12, 2023, and reports two segments, UFC and WWE, plus Corporate. Full-year 2023 consolidated revenue increased 47%, or $534.9 million, to $1.7 billiona, and Adjusted EBITDA increased 29%, or $180.4 million, to $809.1 million. Net income was $175.7 million, down $213.3 million from $389.0 million, reflecting higher operating expenses, including selling, general and administrative expenses up $339.0 million and interest expense up $99.4 million.

UFC delivered record results, with revenue up 13% to $1.3 billionb and Adjusted EBITDA up 11% to $756 million. Free cash flow was $419.8 million, down $69.5 million from $489.3 million, largely due to lower operating cash flow and higher capital expenditures tied to WWE's new headquarters. At December 31, 2023, cash and cash equivalents were $235.8 million and gross debt was $2.761 billion.

For 2024, the company is targeting revenue of $2.575 billion to $2.650 billionc, Adjusted EBITDA of $1.150 billion to $1.170 billion, and Free Cash Flow Conversion in excess of 50%. The filing also notes a January 2024 long-term media rights agreement with Netflix, beginning in January 2025, for Raw in the United States and all WWE shows and specials outside the United States.

02—Key points

Key Highlights

  1. Full-year 2023 consolidated revenue rose 47%, or $534.9 million, to $1.7 billion, including $382.8 million of WWE revenue from September 12 to December 31, 2023.
  2. Net income fell to $175.7 million from $389.0 million, as SG&A expenses rose $339.0 million, direct operating costs rose $189.0 million, and interest expense rose $99.4 million.
  3. Adjusted EBITDA increased 29% to $809.1 million; UFC Adjusted EBITDA was $755.7 million, up 11%, with Adjusted EBITDA margin at 58% versus 60% in the prior year.
  4. UFC set records for media rights, live events revenue of $167.9 million (up 34%), and sponsorship revenue of $196.3 million (up 18%).
  5. Free Cash Flow was $419.8 million, down $69.5 million, while cash and cash equivalents were $235.8 million and gross debt was $2.761 billion at year-end 2023.
  6. 2024 guidance targets revenue of $2.575 billion to $2.650 billion, Adjusted EBITDA of $1.150 billion to $1.170 billion, and Free Cash Flow Conversion above 50%.
  7. In January 2024, WWE agreed to a long-term media rights deal with Netflix beginning January 2025 for Raw in the United States and all WWE shows and specials outside the United States.

03—Questions

Frequently Asked Questions

  1. What drove the decline in net income for 2023?

    The filing attributes the decrease in net income to higher operating expenses, partially offset by higher revenue. Specifically, SG&A expenses increased $339.0 million, direct operating costs increased $189.0 million, depreciation and amortization increased $104.6 million, and interest expense increased $99.4 million. Higher income taxes also contributed to the decline.

  2. How much of the 2023 results came from the WWE acquisition?

    WWE contributed $382.8 million of revenue and $163.0 million of Adjusted EBITDA for the period from September 12, 2023 through December 31, 2023. Including WWE's pre-combination results for January 1 to September 11, 2023, WWE combined revenue was $1.326 billion, up 3% from $1.292 billion in 2022.

  3. What are the company's 2024 financial targets?

    TKO targets 2024 revenue of $2.575 billion to $2.650 billion, Adjusted EBITDA of $1.150 billion to $1.170 billion, and Free Cash Flow Conversion in excess of 50%. Management said it would provide more detail on key assumptions during the earnings call.

  4. Why did free cash flow decline in 2023?

    Free Cash Flow was $419.8 million, a decrease of $69.5 million from $489.3 million. The filing attributes the decline to lower cash flows from operating activities, primarily due to lower net income, and higher capital expenditures, which were mainly related to WWE's new headquarters facility.

  5. What costs did the company incur related to the TKO transaction?

    For the twelve months ended December 31, 2023, consolidated pre-tax results included $83.8 million of merger and acquisition related costs and $41.4 million of restructuring, severance and impairment costs from the cost reduction program. The company also recorded $34.2 million in litigation-related costs, including a $20.0 million charge for settling a WWE antitrust lawsuit.

04—Continue

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