TKO Group Holdings, Inc.

Good afternoon, and thank you for joining today's Q3 2024 TKO earnings call. My name is Regan, and I'll be your moderator today. All lines will be muted during the presentation portion of this call with an opportunity for questions and answers at the end. If you'd like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to our host, Seth Zaslow, head of investor relations. Seth, you may now proceed.

Good afternoon, and welcome to TKO's third quarter 2024 earnings call. A short while ago, we issued a press release, which you can view on our investor relations website. A recording of this call will also be available via our website for at least 30 days. After prepared remarks from Ari Emanuel, TKO's executive chair and chief executive officer, and Andrew Schleimer, TKO's chief financial officer, we'll open the call for questions. Mark Shapiro, our president and chief operating officer, and Andrew will be handling the Q&A. The purpose of this call is to provide you with the information regarding our third quarter 2024 performance. I want to remind everyone that the information discussed will include forward-looking statements and or projections that involve risks, uncertainties, and assumptions. Please see our filings with the Securities and Exchange Commission for further detail. If these risks or uncertainties were to materialize or any assumptions prove incorrect, our results may differ materially from those expressed or implied on this call. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new information or future events, except as legally required. Our commentary today will also include non-GAAP financial measures, which we believe provide an additional tool for investors to use in evaluating ongoing operating results and trends. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP metrics can be found in our press release issued today, as well as the information posted on our IR website. With that, I'll now turn the call over to Ari.

Thanks, Seth. Just over a year since UFC and WWE came together to form TKO, our conviction in this business is as strong as ever. We're executing on our strategy and delivering record results while realizing greater integration and synergy opportunities than initially expected. On the heels of TKO's solid third quarter performance and with our visibility through year end, we're now expecting to come in at the upper end of our full year guidance range for both revenue and adjusted EBITDA. Additionally, two weeks ago, we made two announcements that we believe reinforce our commitment to creating long-term value for shareholders. First, we authorized a capital return program featuring a $2 billion share repurchase program and a quarterly cash dividend program of $75 million. Second, TKO announced an agreement to acquire industry-leading sports assets, professional bull riders, or PBR, premium sports hospitality provider On Location, and global sports rights and production powerhouse IMG. I cannot impress enough how bullish we are about this deal. which aligns with the pure play sports strategy TKO will execute and be known for. This acquisition strengthens our global position in sports rights, experiences, and hospitality, and it adds PBR to our portfolio as another valuable and growing sports league. These assets will power our profile, give us greater scale, strengthen our position in the sports marketplace, and accelerate returns for shareholders. We're also proud and pleased to share that On Location has extended its partnership with the NFL through 2036, ensuring it remains the official hospitality provider at premier events, including the Super Bowl, NFL Draft, and NFL International Games for years to come. Turning to the quarter, our results highlight sustained demand for UFC and WWE live events and underscore our business's ability to reach new heights and attract fans globally. UFC 306 at Sphere Las Vegas is a prime example. The sold out event not only set the record for UFC's highest grossing live event, but also became Sphere's highest grossing single event and achieved UFC's highest event merchandise and sponsorship sales. Notably, Eighty-nine percent of ticket buyers came from outside Nevada, one of the highest out-of-town attendance rates for any UFC or Sphere event. This turnout underscores UFC's appeal as a destination event, drawing fans from across regions and delivering economic benefits to host cities. Beyond these impressive metrics, this event also showcases what TKO is truly all about, innovating and revolutionizing the way fans consume and engage with live sports. Internationally, UFC events also delivered. UFC 304 in Manchester became the highest-grossing event at Co-op Live and drew the largest attendance for a UFC event. event in the UK. In Perth, UFC 305 marked a successful start to our multi-year partnership with the Western Australian government, setting the record for RAC Arena's highest grossing event. And in Paris, our September fight night became Core Arena's highest grossing event to date. At WWE, live events outperformed in the third quarter and set 42 individual market records for ticket sales, evidence that the strategies we have been implementing around ticket pricing and event routing are bearing fruit. While the US remains strong, momentum is increasingly evident in international markets, where WWE continues to sell out venues and draw record crowds. In the third quarter, WWE held 18 shows outside the US. up from 11 in the same period last year. Highlights included a highly anticipated return to Japan after a five-year hiatus, selling out in Tokyo with a record gate, and Germany's first-ever premium live event, which became WWE's highest-grossing arena event, a record that we have broken three times this year. Meanwhile, in Cleveland, SummerSlam achieved record-breaking results, becoming WWE's highest-grossing non-WrestleMania event in history. WWE also had successful debuts on USA Network for SmackDown and the CW Network for NXT. In fact, through the first five weeks, NXT is up 12% in viewership versus USA last year. Meanwhile, SmackDown's return to USA Network under our five-year domestic media rights agreement with NBCUniversal has already driven strong and sustained viewership. Without a doubt, this partnership further strengthens our longstanding relationship with NBCU, and we're anticipating a strong draw for the upcoming debut of quarterly primetime specials, starting December 14th with Saturday night's main event on NBC. And with Raw's launch on Netflix nearing, both WWE and Netflix are actively preparing for an impactful debut on January 6th, which will expand the reach of WWE and deliver our flagship content to a global audience. As we close out the year and look to 2025, we're confident in the strength of our iconic properties and the momentum we're building towards significant milestones. From an exciting lineup of live events that include UFC 309 at Madison Square Garden later this month, WrestleMania in Las Vegas, and the first ever two-night SummerSlam at MetLife Stadium, to closing our acquisition of PBR, On Location, and IMG, all of which fuel further growth.