WWE experienced a “historical performance” during Q2, but whilst UFC continued to post positive results, the mixed martial arts organisation prepares for trial in its antitrust lawsuit case.
TKO Group – parent company of WWE and UFC – outlined the performance of both companies during its Q2 results, with CEO Ari Emanuel believing in the long-term growth of the combat sports conglomerate.
From 1 April – 30 June, TKOs’ total revenue stood at $851.2m, a 179% increase from the $394.4m generated in the same period in 2023. Revenue for Q2 2024 also increased from the $629.7m in Q1 2024, representing a 35% rise.
Q2 Adjusted EBITDA increased by 142% YoY, from $173.6m, to $420.9m. TKO attributed the increase to the $251.3m Adjusted EBITDA of WWE and the $43.7m from the UFC, whilst offsetted by the $47.7m in corporate expenses.
Net income stood at $150.7m for the quarter. This represents a YoY increase of 18% from $68.9m to $81.8m. This reflected the increase in revenue partially offset by an increase in operating expenses.
The increase in operating expenses primarily reflected a rise in direct operating costs of $177m, an increase in selling, general and administrative expenses of $169.1m, and an increase in depreciation and amortisation of $88.8m.
It must be noted that TKO Q2’ 2023 results do not account for WWE’s results as the publicly traded company did not launch on the stock exchange until September 2023.
“TKO generated strong financial results in the quarter, highlighted by record quarterly revenue and Adjusted EBITDA,” said Emanuel, Executive Chair and CEO of TKO.
“In light of this continued momentum, we are raising our full year 2024 guidance for the second quarter in a row. The strength in our underlying business continues to give us great conviction in TKO’s ability to deliver sustainable long-term value for shareholders.”
WWE’s historical performance
TKO hailed the WWE’s Q2 performance as “historical” as the sports entertainment and wrestling company goes from strength to strength after hosting its most successful event in company history last April with WrestleMania XL.
WWE Q2 revenue was $456.8m, a 44% increase from the previous quarter of the year. WWE revenue was broken down into four categories; media rights and content, live events, sponsorship and consumer products.
Media rights and content brought in $260.7m, live events generated $144.1m, sponsorship revenue was $24.7m, and consumer products at $27.3m.
Adjusted EBITDA margin was 55% for Q2, an increase compared to WWE’s margin of 42% for the period from the same period last year, whilst it was not under TKO officially at the time.
Whilst live event and media rights revenue increased, this was attributed to the addition of one more premium live event (PLE) than last year, as well as reductions in production costs for its weekly programming TV shows.
2024 has seen WWE, under the guidance of President Nick Khan, post its most successful event ever (WrestleMania XL) as well as attendance and gate records for the other PLE’s it has staged this year, that being Backlash France in May and Clash At The Castle in June.
Antitrust case hangs over UFC’s head
UFC total revenue was $394.4m, a 29% uptick YoY from the $205.2m generated in Q2’ 2023.
Media rights was once again the primary growth driver for the company, bringing in $250.6m, whilst live events ($69.1m) and sponsorship ($61.7m), an increase of 113% and 33% respectively.
TKO revealed that UFC revenue was a result of hosting one more numbered event (UFC 302 for example) than the previous year. The escalation of media rights valuations, as well as higher site fees and new sponsors from company renewals the previous year all contributed.
Whilst the UFC enjoyed another healthy quarterly report, the company is still embroiled in a $335m antitrust lawsuit. After it appeared that plaintiffs and the UFC were heading towards a settlement, US District Court of Nevada Judge Richard Boulware rejected the settlement and now seems likely that the UFC will stand trial on 28 October 2024.
TKO stated that the company is “evaluating all of its options including, without limitation, an appeal, and has also initiated discussions with plaintiffs’ counsel, who have expressed a willingness to engage in separate settlement discussions for the Le and Johnson cases.
A motion to dismiss the complaint in Johnson remains pending and no trial date has been set.
2024 Future Guidance
CEO Emanuel expressed his enthusiasm over the Q2 results and indicated that both WWE and UFC’s performances were a result of TKO’s focus on delivering immersive and valuable sports experiences.
He told investors: “Consumers, and in particular sports fans, are increasingly seeking customised, immersive, communal experiences, and TKO has demonstrated throughout the first half of the year how we are capitalising on this demand and building entire worlds and weekends around our premium content.
The strength and appeal of our iconic properties are undeniable, and the value proposition we laid out for TKO is widely evident.
“As we build toward the launch of WWE’s partnership with Netflix and with the record breaking NBA media rights deals signalling powerful secular tailwinds ahead of our rights renewals, our conviction in TKO’s potential for long-term growth and value creation is as strong as ever.”
Taking into consideration its performance for the first six months of 2024, TKO has raised its revenue projections to $2.67bn for the financial year. The company’s H1 total revenue currently stands at $1.48bn.
