TKO Group Holdings, Inc.

Hello, everyone. Thank you for joining us and welcome to TKO's second quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Seth Zaslow, head of investor relations. Seth, please go ahead.

Good afternoon and welcome to TKO's second quarter 2026 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 Ariel Emanuel, TKO's Executive Chair and Chief Executive Officer, Mark Shapiro, TKO's President and Chief Operating Officer, and Andrew Schleimer, TKO's Chief Financial Officer, we'll open the call for questions. Mark and Andrew will be handling the Q&A. The purpose of this call is to provide you with information regarding our second quarter 2026 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. TKO's unique ability to deliver one-of-one live events and experiences was front and center in the second quarter. Nothing illustrates this better than UFC Freedom 250 held in June. This event was a roaring success for our company, the UFC brand, and the sport of mixed martial arts, exposure, earned media, audience expansion, and a weekend-long fan experience. TKO also played an integral role in the success of this year's record-breaking FIFA World Cup, where On Location staged the largest hospitality program in the tournament's history. Fans from 154 countries purchased more than 600,000 hospitality packages across 104 matches in 16 host cities. The qualitative feedback on our delivery bodes well for the continued growth of On Location and affirmatively sets the table for what will be a historic LA 28 Olympic Games. Thank you so much for joining us. As we look to the back half of 2026, we're raising our full year guidance with conviction in our businesses stronger than ever. And with that, Mark will take you through the quarter.

Thanks, Ari. We've consistently stated that 2026 is a year of execution for TKO. The second quarter confirmed that. Thank you for watching. Thank you for watching. The seven-bout fight card itself reached more than 34 million total viewers in reported markets, including 17 million viewers across the U.S. and Latin America on Paramount+. And this goes well beyond a single event. Since the start of the year, 20 million subscriber households have watched more than 200 million hours of UFC programming on Paramount+. delivering viewership more than 23 times the average UFC pay-per-view event over the past two years. That's the strength of the Paramount partnership at work in just six short months and proof that removing the double paywall was indeed the right decision. TKO Properties' outsized impact on conversation, subscriber acquisition, and retention is undeniable. Beyond the audience numbers, the event generated more than $1 billion in earned media value, the kind of exposure only a handful of events in the world can command. Andrew will cover the event's financials in more detail, but I can tell you unequivocally that our investment in this event, time, energy, focus, delivered results as designed. Mark Shapiro, Seth Krauss Mark Shapiro, Seth Krauss UFC 329 in Las Vegas last month was also a standout, becoming the highest grossing event in UFC history. The same June evening that UFC returned to Baku, WWE returned to Riyadh for a successful Night of Champions, drawing a sold-out crowd of more than 18,000 fans. WrestleMania 42 drew more than 106,000 fans and one of the highest all-time gates in WWE history. WWE Backlash sold out in Tampa, Saturday Night's main event sold out in Fort Wayne, Indiana, and WWE staged a run of successful events across Europe, spanning the UK, Spain, France, and Portugal, headlined by the aforementioned Clash in Italy, WWE's first ever premium live event in the country. Coinciding with our local launch on Netflix, Clash sold out Turin's Inulpi Arena and set the record for the highest-grossing entertainment event ever at that arena. This is a long way of saying that demand for WWE events is insatiable, and we're in the position of being at the controls of creating this demand. SummerSlam SummerSlam Thank you for watching. and they are not always in that order. Which brings me to recent chatter around WWE viewership. On Netflix, WWE Raw was a global top 10 title every single week of the second quarter. And beyond our expansion with Netflix into Italy, we recently launched premium live events with the streamer in Germany, Austria and Switzerland as markets continued to come online. Mark Shapiro, Seth Krauss These numbers tell the real story. And I would add that TKO properties like UFC, WWE, PBR, and increasingly Zufa Boxing are purpose-built for our current social media environment. Social media amplifies our events. Shared highlights and content don't substitute for the event itself. They market the next one. Thank you for watching. and the runway to scale this in more markets and cities across all our properties and for bigger commitments is significant. Our strategy is working and our target of $380 to $420 million by the year 2030 is on plan. To that point, in May, we signed a landmark three-year, seven-event agreement with the Arizona Sports and Events Alliance, spanning UFC, WWE, PBR, and Zufa Boxing, one of the broadest multi-property financial incentive package deals we've put together to date. And next week... UFC 330 brings the championship bout back to the city of brotherly love, Philadelphia, for the first time in 15 years as part of the city's America 250th celebration, another market investing in TKO to drive economic impact. The value of our live events is undeniable, and it's only going to grow from here. Thank you for watching. World Cup hospitality sales surpassed $2 billion from more than 568,000 packages sold through the second quarter, and that's before counting the 25 matches in July. Demand remained exceptionally strong straight from the group stage through to the final, with significant last-minute purchasing activity across every sales channel. And this isn't only a World Cup story. On Location's portfolio of events is seeing similar anticipation and appetite, most notably the LA-28 Olympics, which, while still two years away, has already generated orders for more than $280 million on over 20,000 bookings. The success of our hospitality and experiential program doesn't merely speak to a trend, but instead what is quickly becoming the norm. Front-of-the-line access and the consumer's increasing desire to pay more for a personalized, customized offering. Meanwhile, the IMG business continues to partner with some of the most iconic sporting events globally. Recently, we drove sponsorship and broadcast coverage for the most watched Wimbledon since 2019 and for the Open Championship at Royal Birkdale, where IMG produced the live broadcast of every shot seen around the world across 217 territories. The range of this business is a true differentiator and these invaluable relationships deliver real commercial outcomes that compound over time across the entire TKO portfolio. At PBR, the business had an extraordinary quarter. Our Space Cowboys event at the U.S. Air Force Academy sold out and drew nearly 31,000 fans. PBR Team Series is currently in full swing and we are in active discussions with several potential investors for new franchises. Finally, turning to boxing. Zufa Boxing We are signing world-class talent, most notably Shakur Stevenson, one of the biggest names in American boxing. And on September 12th, we will return with TKO's next super fight featuring Ryan Garcia versus Connor Benn at T-Mobile Arena in Las Vegas, airing on Paramount Plus globally and on DAZN in the UK and Ireland. The growth of this asset is comfortably ahead of schedule. All together, the second quarter was another period of disciplined, high-quality execution. Sports has become the anchor of premium media, commanding unrivaled live audiences and cultural relevance. TKO offers leverage to secular growth in live sports and entertainment, and in many ways, TKO has defensive business model characteristics to AI disruption risk. Demand for live entertainment shows no signs of slowing and owners of differentiated IP that offer differentiated live experiences like TKO does will be first in line to benefit. Our strategy is tight and fit for the time. Demand for live events and premium IP in the experience economy is growth in global partnerships, significant step-ups from our media deals delivering high-margin returns, momentum in financial incentive packages, over 70% of long-term contracted revenue at UFC and WWE providing visibility and predictability, the development of Zufa Boxing as our next significant combat sports asset, and on locations, total beatdown, victory lap with the World Cup Hospitality Program. Not to mention the fact that the stage is well set for the L.A. Olympic Games. These are the catalysts for TKO. Andrew Zaslow, Seth Krauss

Good afternoon. We delivered strong operating and financial results across our businesses in Q2, and we continued to execute at the highest levels on the world's biggest stages. Given our performance to date and our visibility into the remainder of the year, we have raised our full-year outlook. Before getting into the numbers, I want to remind you of two items that had an impact on results this quarter, specifically UFC Freedom 250 and the FIFA World Cup. First, with regards to UFC Freedom 250, we incurred significantly higher than normal costs, which we partially offset with sold-out global partnerships inventory. As a reminder, we did not sell tickets and therefore did not record any live events revenue. Given the event's financial profile, which, as anticipated, resulted in an approximately $30 million loss, our margins at UFC, as well as on a consolidated basis, were meaningfully impacted. Second, revenue and adjusted EBITDA for the FIFA World Cup are recognized based on the volume of matches delivered and, as such, will benefit both Q2 and Q3. In the second quarter, we recorded approximately $45 million of adjusted EBITDA at the IMG segment. Given the scale and complexity of this event, we're still in the process of closing out our books to determine the final financial results, but we now expect to exceed our estimate of approximately $75 million in adjusted EBITDA for the full year. Moving to our consolidated results for the second quarter, we generated revenue of $1.547 billion and adjusted EBITDA was $650 million. Our adjusted EBITDA margin was 42%. Revenue increased 18%, adjusted EBITDA increased 23%, and adjusted EBITDA margin increased approximately 180 basis points as compared to the prior year. Removing the impact of UFC Freedom 250, we would have seen significantly higher total company margin expansion. In the quarter, UFC generated revenue of $536 million, an increase of 29%, or $120 million. Thank you for watching. UFC held 12 total events in the period, two numbered events and nine fight nights plus UFC Freedom 250 compared to 11 total events in the prior period comprised of four numbered events and seven fight nights. Meteorites production and content revenue increased 25% to $325 million, driven by a step up in meteorites fees related to the Paramount deal that began in January, and would have been even higher if it were not for the fact we held one fewer numbered event compared to two additional fight nights, which had an unfavorable net impact in the quarter. Partnerships and marketing revenue increased 69% to $145 million, driven by the addition of new partners and higher renewals from existing partners, largely related to UFC Freedom 250. We successfully leveraged this unique event to strengthen our relationships with existing partners, including RAM and Crypto.com, and create a point of entry for new categories and partners, including Exodus, EndRule, SuperShore, and Starlink. Thank you very much. As expected, live events and hospitality revenue decreased 18% to $48 million due to the mix of events and venues, most notably the absence of ticket sales for UFC Freedom 250 and one fewer numbered event. Despite the decline in the quarter, we continue to see strong demand for our recent events, including record gates for both UFC 328 at the Prudential Center in Newark and UFC 329 at T-Mobile Arena in Las Vegas. With respect to financial incentive packages, we are successfully executing on our strategy. We are leaning in and laser focused on generating more value for our brands from a mix of public and private funding sources domestically and abroad. The economic growth, community connection, and global attention we deliver for our partners, combined with the range of UFC, WWE, PBR, and Zufa boxing events and offerings across our portfolio, is fueling a significant increase in inbound interest, driving higher renewal rates and forging new relationships in more markets. We're pairing that inbound demand with a targeted outbound effort, leveraging our reach and relationships, as well as IMG and On Location's global networks to open doors in key growth markets. In the days leading up to UFC Freedom 250, we met with dozens of existing and new contacts in Washington, D.C., a clear example of how our access and the attractiveness of our events can translate into opportunity. At UFC, financial incentive packages almost doubled year over year. We returned to Newark and Baku, two locations with FIPs in the prior year quarter where we were able to increase revenue for 2026. UFC 327 was the first time we received a significant FIP in connection with an event in Miami. Our Fight Night event in Macau was the first under a new multi-event relationship that includes a meaningful FIP. And our event in Perth included a package under a multi-year agreement. adjusted EBITDA reflected the increase in revenue partially offset by an increase in expenses. Direct operating expenses primarily reflected an increase in athlete, production, and other event-related costs, most notably driven by UFC Freedom 250. SG&A increased primarily due to higher personnel and travel costs compared to the prior period. Our WWE segment generated revenue of $621 million in the quarter, an increase of 12% or $65 million. Adjusted EBITDA was $368 million, an increase of 12% or $39 million. Adjusted EBITDA margin was 59%, on par with the prior year period. As with UFC, WWE's event mix impacted results in Q2. We held 22 international events in the period, including a European tour and a clash in Italy PLE in Turin, and many more. We believe there's immediate opportunity to grow WWE's international portfolio. The next leg up will be a function of, amongst other things, us leaning in further with Netflix, where all our content sits internationally, leveraging our collective expertise, inventory, and relationships to maximize value from fully integrated broadcast and in-venue packages. We are opening doors for each other, and with the support of IMG's global network, expanding our pipeline of prospective partners around the world. Thank you for watching. Consumer Products Licensing, and other revenue increased 38% to $46 million, driven by higher royalties for trading cards and other collectibles compared to the prior year period. While a relatively modest portion of our overall business, we continue to make progress in this growing area at both UFC and WWE, in no small part due to our recent multi-property deal with Fanatics. Partnerships and marketing revenue increased 8% to $63 million, driven by new partnerships and renewals across multiple categories. The most notable driver of these results, WrestleMania 42, featured a record 32 partners, including Snickers, 2K, Riyadh Season, Ram and DoorDash, among others. As we saw in Q1, this growth came despite the additional international events. Live events and hospitality revenue decreased 18% to $152 million, almost exclusively related to a decrease in ticket sales for WrestleMania 42 compared to the prior year period. Adjusted EBITDA reflected the increase in revenue partially offset by an increase in expenses. Direct operating expenses increased primarily due to higher talent, production, and other event-related costs, and SG&A increased primarily due to higher travel costs. Both of these increases were a result of the additional international events. Despite the incremental spend, we expect WWE margins will increase meaningfully for the full year. Shifting now to our IMG segment, we generated revenue of $355 million, an increase of 16% or $48 million. Adjusted EBITDA was $79 million, an increase of 171% or $50 million. Adjusted EBITDA margin was 22%, up from 9% in the prior year period. As we previewed on our last call, the increase in revenue primarily related to the favorable impact of World Cup hospitality sales at our location. Thank you for joining us. Adjusted EBITDA primarily reflected the increase in revenue as expenses were essentially flat compared to the prior year. Corporate and other generated revenue of $49 million, an increase of 9%. Adjusted EBITDA was negative $77 million, essentially flat with the prior year period. The increase in revenue is primarily driven by higher management fees related to our boxing initiatives, as well as higher live events and partnerships revenue at PBR, driven by our Space Cowboy event held at the U.S. Air Force Academy, which included a sizable FIP. Adjusted EBITDA reflected the increase in revenue offset by an increase in expenses, primarily due to higher personnel and other operating costs. Now moving on to our capital structure. In the second quarter, we generated $350 million of free cash flow. Our free cash flow conversion of adjusted EBITDA was 54%. Free cash flow included the favorable impact of $22 million of net collections related to on-location for the FIFA World Cup. Free cash flow also included the unfavorable working capital impact of UFC's new media rights deal with Paramount. Turning to capital allocations. As Mark noted, maintaining a robust and sustained capital return program remains a top priority. Year-to-date, we've returned in excess of $1.3 billion of capital to equity holders through our dividends and share repurchases. On June 30th, we made our Q2 cash dividend payment from TKO APCO of approximately $150 million, or $0.79 per share. We intend to continue to fund quarterly cash dividends with cash flow from operations or cash on hand. Regarding share repurchases, as we previously disclosed, on June 30th, we completed our most recent ASR agreement to repurchase $800 million, or approximately 4.2 million shares, of our Class A common stock. In May, we commenced repurchases under a 10B51 trading plan for up to $200 million of our Class A common stock. We completed the program in July, and in the aggregate, we purchased an additional 1 million shares under the plan. Currently, we have just over $1 billion available under our previously authorized repurchase program. As disclosed in our earnings release, we intend to commence additional buybacks under our existing program in the near future. Given the strength of our balance sheet and what we believe to be a dislocation in our stock price relative to its intrinsic value, we continue to view this as a highly value accretive opportunity. We ended the quarter with $4.659 billion in debt, and Mark Shapiro. Therefore, we believe the results are best evaluated on a full-year basis given the quarterly fluctuations that are inherent in our operations, most notably related to the timing of our live events and the mix of locations, venues, and cards. As announced in our press release, we are raising our full-year 2026 guidance for revenue in adjusted EBITDA. We are now targeting revenue of $5.775 billion to $5.825 billion and adjusted EBITDA of $2.275 billion to $2.305 billion, representing an increase of $75 million and $25 million respectively at the midpoint of the ranges as compared to the prior guidance issued in February. The increase is based on strong operating performance across our businesses for the first six months of the year and our anticipated performance for the remainder of the year. Regarding our event calendar and cadence we continue to closely monitor developments in and around the Middle East with regard to potential implications on our business. Year to date, we've successfully staged every event we originally planned, including two events on June 27th, WWE Night of Champions in Saudi Arabia and a UFC Fight Night in Azerbaijan, as well as a UFC Fight Night in Abu Dhabi just nine days ago on July 25th. And as Mark noted, we're moving forward with our remaining events in the region, including a WWE PLE and a UFC numbered event. With respect to UFC, the Paramount era has allowed us to level set and benchmark our athlete pay without diluting our margins. Having said that, our business catalysts, meteorites, global partnerships, live events and FIPs, and consumer products licensing, all significantly high growth, high margin contributing verticals, have and will enable us to absorb the incremental costs while still meaningfully enhancing our margin profile in 2026 and beyond. Consistent with our prior calls, while we are not providing quarterly guidance, we want to highlight a few notable items as we look to the third quarter. At UFC, media rights revenue will continue to reflect the step up from the Paramount Rights deal. The mix of live events in the quarter will also favorably impact results. We expect to stage 12 events in Q3 26, three numbered events and nine fight nights. This compares to 10 events in the prior period, which included two numbered events and eight fight nights. With respect to FIPs, the fight night held in Abu Dhabi carried a meaningful incentive package, as did a similar event we hosted in the market in Q3 of last year. The fight night held this past weekend in Belgrade and UFC 330, which will take place in Philadelphia on August 15th, also carries significant FIPs. At WWE, the timing of live events in the quarter will negatively impact our results. Q3 has one premium live event, SummerSlam, compared to four in the prior period. Media rights will continue to reflect the step up from the ESPN rights deal, but the decrease in total nights of PLE programming will impact results. Live events and partnerships revenue will also reflect the decrease in events, as will production costs and other event-related expenses. At the IMG segment, we expect results will reflect the continued benefit of On Location's World Cup Hospitality Program, as well as the positive impact of a number of IMG's signature tennis and golf events, including the U.S. Open, Wimbledon, and the British Open. These benefits will be partially offset by continued spend in support of our ongoing sales efforts for LA28. At Corporate & Other, we expect our results to reflect the contribution from the Garcia-Benn boxing match on September 12th. As a reminder, we provided services for the Canelo Crawford match in the prior year period, so we expect the impact of our boxing initiatives to be relatively comparable. In terms of free cash flow, while we have not given formal guidance, we continue to target a free cash flow conversion rate in excess of 60%, normalizing for the impact of net payments related to the World Cup and UFC's rights deal with Paramount. In conclusion, we generated strong results in the first half of the year, underscoring the momentum across our businesses. As we turn to the second half, we remain focused on disciplined execution and continuing our robust capital return program. Our confidence in the path ahead is grounded in the fundamentals of this business. World-class IP, deeply engaged global audiences, diverse and recurring revenue streams, and significant runway for growth. With that, I'll turn it back to Seth.

Thanks, Andrew. Operator, we're ready to open the call for questions.

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, Please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Brandon Ross with LightShed. Your line is now open. Please go ahead.

Hey, guys. Thanks for taking the questions. I'd hate to lead off talking about other companies, but there's a few things that have seemed to pop into investor focus recently. On the first one, PFL hasn't really materialized into any kind of threat following the hoopla around the Saudi investment a few years ago. But now they're joining with Jake Paul and MVP and I guess the relationship they have with Netflix. How do you believe that combo can impact your business and how seriously do you take them as a competitor? Thanks, Brandon.

Look, I would say that clearly on an individual standalone basis, these promotions, both MVP and PFL, were not necessarily sustainable. Now they've come together, and we'll see what they can conjure up. What we know is that competition's always made us stronger, and a rising tide lifts all boats.

Okay, and... I know you keep saying it, 2026 has been the year of execution for you, and you've continuously pointed out you don't anticipate any major M&A, but potential deals like a combo with Formula One have come into investor dialogue once again and probably impacted both your stock prices. Are you open to bigger M&A as you turn the page to 2027, or do investors just have this wrong?

Look, as we said in our prepared remarks, as we've said quarter after quarter, as you just said, we are 100% focused on execution. And if we continue doing just that effectively, TKO will remain a beat and raise story. We are not hunting for M&A of any kind. There are absolutely no conversations with F. Wonk, anybody else for that matter. And there's absolutely nothing on the horizon that would take our eye off the ball from our execution story. Anyone spreading that is just flat out lying. And anyone speculating that is just flat out seeing ghosts.

Perfect. Thank you for your candor. Always.

Your next question comes from the line of Steven Lasik with Goldman Sachs. Your line is now open. Please go ahead.

Hey, guys. Thanks for taking the questions. Mark, you spoke a lot to the strong engagement trends you saw in the quarter from the UFC and WWE. Be curious if you'd speak a little bit more looking ahead to how you keep engagement growing from here, how you're thinking about things like balancing international engagement versus protecting the engagement in your core markets. And then ultimately, where, if anywhere across the league, do you think there might be an opportunity to make investments to realize some of these engagement goals?

Yeah, look, Stephen, I would just tell you that we are as focused on engagement as we are on reach. And that's the name of the game. I mean, that is the equation, if you will, right? The catalyst for our company is, Andrew and I both laid out, are simple. They're identifiable. They're easier to model than most. There are no hidden recipes when it comes to TKO. We're about event ticket sales and optimization. We've got a strong guide on global partnerships, 1.2 billion by 2030. We've got a strong guide on financial incentive packages, 380 million to 420 million by 2030. Both of those are on good, solid ground with some strong secular tailwinds behind them. Our media deals are locked in at approximately $15 billion of aggregate value. for the next five to seven years. Our next major combat sports asset, Zufa Boxing, is not just underway, it's ahead of plan. I'm sure you're reading each and every day about different fighters that are signing up under the Zufa Boxing banner. We're prudent when it comes to M&A. And as you just heard me say, there's nothing on the horizon and we're not hunting for anything. We're highly cash flow generative. and we have a management team and a board that's laser focused on returning capital to shareholders. So when you're focusing on the business at hand, you are constantly looking at how you improve the overall fan experience, how you best position your brand for domestic and international growth to your point. You focus on audience growth and how you bring more people under the tent with singular big eye-catching events that generate significant conversation. And at the same time, you also look at what's best from an investment standpoint for our shareholders. That's what we do. And I would tell you that we believe our value proposition is second to none. And if we keep doing our jobs right, that balance is gonna, that pendulum's gonna swing a little bit, whereby SummerSlam SummerSlam SummerSlam SummerSlam SummerSlam Thank you for joining us. The actual bottom line, right? We prioritize the fan experience and improving profitability. They're not mutually exclusive, and they're not always in that order. And if we get the equation right, we're growing globally, which is certainly important to us and to Netflix. And if we get that right, we're driving viewership and global partnerships and financial incentive packages here domestically at home.

Thanks for that. And then if I could just on the guidance increase for Andrew, I'd be curious if there was any more detail you could provide around the drivers of that increase. It sounds like the World Cup performed better than expected so far in the second quarter. But as you look out, any other parts of the business that are either performing better or worse than expected?

Yeah, look, I think the increase is not necessarily a result of any one specific item. So I don't want to over index on the World Cup, even though we had a strong contribution in Q2. Obviously, there'll be Q3 contribution and it will be above our prior announced expectations for the World Cup. But it really reflects the overall strength in our business, especially UFC, which is firing on all cylinders now. and a number of moving pieces. So nothing in particular to call out, but I do want to make sure that it's not an over-index on World Cup.

Great.

Thank you both. Stephen, I would also just add, on location, just like IMG, such an important part of the overall life cycle we have here in the equations. We talked about it in the prepared remarks, but you're just seeing so many more personalized experiences, customized experiences, front of the line access, parents wanting it from their kids, individuals wanting to go out with their friends. These communal events experiencing them in different, unique ways. And while that margin, although we benefited from it this quarter, isn't up to speed or up to snuff with where WWE or UFC sits. It's still such an important element for the growth of those two leagues, let alone as a standalone business on location itself. It's helpful.

Thank you very much. Thank you.

Your next question comes from the line of David Karnofsky with JP Morgan. Your line is now open. Please go ahead.

Hey, thank you. Mark, it'd be great to get your latest read in the sports rights landscape. I know you're inter-cycle, but there's a lot in the pipeline from now until two years out when you might bring SmackDown or NXT to the market. So just how are you thinking about things? And is there any optionality on your end to accelerate discussions?

We have no plans to accelerate any conversations on our end. We believe we're very well positioned with long-term deals, recurring revenue, locked-in escalators, and very motivated marketing partners. So we're grateful to be there, and we're, of course, paying attention to all that's on the horizon, whether that's World Cup or Major League Soccer or the NFL, obviously the NHL. I mean, there's a lot in the queue. We are kind of there to support and drive as it relates to the IMG business. And they're seeing that business quite frothy at the moment. And I think it does come back to the fact that sports are just in a category all to itself right now. I mean, it truly is. Live experiences, unpredictable, unpredictable outcomes. passionate fan bases, historically strong, passionate fan bases, and terrific engagement, even in games that aren't always so close. And once again, the World Cup was front and center demonstrating all of that. I mean, just an unqualified success for FIFA. Obviously, we played a small part in that with on-location. and I think the Women's World Cup is going to be just as strong from an attention-setting standpoint. So we're sitting in a good place right now across all fronts, Zufa Boxing and PBR included, and we will continue to drive the market as it relates to our leadership position globally with IMG.

and maybe just one on WWE International. You noted scheduling more tours there, the opportunity with events and sponsorship, especially as Netflix rolls to more regions. I guess Andrew called out small sets though with costs and domestic sponsorship. So maybe can you just speak a bit about the opportunity and kind of how you consider the mix of factors?

Look, we're a global brand and we're not going to shy away of bringing our product Thank you for joining us. to strategic locations to set and position ourselves up for long-term growth. Look, as it relates to partnerships at WWE, we do believe, as I said, there is a leg up opportunity internationally as we get deeper with Netflix, who, as you know, has a license to all of our content internationally. where they have media and they're rolling out dynamic ad insertion, but also value sort of coveted in venue and in arena inventory. So our ability to go to market together, us opening up our Rolodex, them opening up their Rolodex, that doesn't happen overnight, but it's certainly something that we're bullish about later this year into 2027. Thank you.

Your next call comes from the line of Ryan Gravett with UBS. Your line is now open. Please go ahead.

Great. Hey, guys. Andrew, appreciate the detail on the impact from the Freedom 250 event this quarter. But curious how you see the opportunity on translating some of the one-time uplift you saw on the partnership revenue side and the quarter into broader and more comprehensive deals going forward. And then, you know, not looking for guidance at this point, but is there anything you would flag to us on free cash flow conversion in 2027, particularly as it relates to on location or the UFC rights deals? Thanks.

Look, on UFC Freedom 250, I will reiterate we came in exactly as anticipated or close enough for government work with a loss of approximately $30 million. And we've held true to what that level of overall loss slash investment was going to be. Hats off to our global partnerships team who utilized this one of one event as an entry point for new partners to level up existing partners and to introduce and many more. Mark alluded to in his prepared remarks, as did I, meaningful multi-year deals. So this wasn't just buy UFC Freedom 250 and get the spectacle. We did use this to leverage this event and its value to sign up partners that impact 26, 27, in some cases 28 and beyond. So we feel real good about our positioning going into next year. As it relates to free cash flow conversion, I'll say at this point in time, we don't give forward year guidance. We do anticipate being in excess of 60% on a normalized basis for those normalizing factors I called out in my prepared remarks. And we do believe there's meaningful room for a step up in free cash flow conversion in 27 and 28 and beyond. Great. Thank you.

Your next call comes from the line of Brent Navin with Bank of America. Your line is now open. Please go ahead.

Thank you. Just wanted to go to WWE live events. It seems like this quarter was impacted by WrestleMania in particular. Can you just help maybe distinguish or quantify that? The factors that were specific to this year's event versus what you're seeing in the broader live events business. And does this outcome possibly make you reevaluate elements of your live event strategy going forward?

WWE live events, again, was almost exclusively impacted, as I stated in my prepared remarks, by WrestleMania 42 versus WrestleMania 41. We did, however, in the quarter as well, stage more events, more international events as well, 22 versus 2 in the prior year quarter. Again, this is an investment, as I articulated in the last answer, in WWE and broadening and growing its fan base. So this is deliberate. Just like going back to Vegas for a second year for WrestleMania was deliberate. WrestleMania's live event revenue for 26, despite being lower than 25, was still one of the largest box offices in the history of WWE. And we earned a meaningful financial incentive package to go back to the state of Nevada. So those economics comparable to the prior year or lesser to the prior year, but still extraordinarily beneficial to the company. We increasingly view our events not just as live events, but as media events that drive viewership and fan engagement across social and help us monetize our most valuable assets. So as long as we believe going to a certain location is going to check those boxes, we're going to make those strategic investments in the long term.

Thank you, and just maybe as a follow-up, I mean, it seems like historically some of your highest-profile events, whether it's Freedom 250, the Sphere event a few years ago, or even Bring Back Conor, have generated a lot of interest and engagement around the UFC product. I guess why not be more aggressive in investing behind these tempo events if it drives that audience growth engagement and ultimately longer-term value and possibly even expanding that to the WWE ecosystem as well?

Look, I think you heard us say in the prepared comments that we will be hunting for new opportunities, unique experiences, seminal venues in various regions of the world that help us garner that same kind of buzz and attention. So it's not that we're not doing it. It's it's that. Mark Shapiro, Seth Krauss But yes, I would remind you that when we did this fear, everyone was afraid that this once-in-a-lifetime spectacle was going to be a financial loser for us. It wasn't. Then when we did UFC Freedom 250, despite telling everyone we were going to lose $30 million and do record-setting numbers in terms of earned media, nonetheless, I kept reading about the fact that they're probably going to lose more than they say, and we didn't. Connor was just a 329. I mean, that's just a numbered event. That wasn't anything different from what we do week to week, albeit that he hadn't fought in such a long time. So there was great demand in having a chance to see him come back to the stage. Look, we say what we mean and we mean what we say. And we are in the business of putting on the best of the best live events and experiences. and we're sitting in a marketplace that whether it's FIFA World Cup or Bruno Mars back on tour or Odyssey or Spider-Man, experiences show no sign of slowing down. It's a permanent way of the world and TKO today sits front and center with WWE, UFC, PBR and on location and we will continue to take those secular tailwinds and milk them for everything they are.

Operator, let's take Operator, let's take one last question, please.

Your final question comes from the line of Vikram Kesavahatla with Baird. Your line is now open. Please go ahead.

Yeah, hey, thanks for taking the question. I wanted to ask about Zufa Boxing. You mentioned in your remarks that the progress has been comfortably ahead of your schedule. As we look ahead, can you talk about your biggest priorities for this business throughout the rest of this year and what we should be looking for in monitoring your progress? And you also referenced the recent events in the UK and New York City. What has the initial reception been like as you've started to expand outside of Nevada, and how do you plan to manage the mix of locations for that going forward? Thanks.

Yeah, look, I would tell you that Andrew can remind everybody of the financial arrangement we have with the JV in just a second. But overall, it's a lot of rinse and repeat in terms of what we're doing with our other assets and properties across TKO, right? We're taking it out to London and New York City because we're trying to, we're efforting to bring more awareness to what it is that we've launched, namely the fighters. And we're on the hunt to create more awareness One-of-a-kind experiences that also feel the added benefit of bringing in more global partnerships, more marketing from our current media partner, more financial incentive packages that we can tie into multi-event, meaning multi-property type deals with various cities and regions. And of course, ultimately that will consumer products and licensing as Zufa Boxing grows. But look, it's early days. Right now, it's about signing up more fighters, expanding our dugout, creating more opportunities and incentives for the fighters themselves, and staging best-in-class fights and best-in-class fight cards. And if that continues to Garner Traction and Momentum in the way that it has in such an accelerated way will be well on our way to creating that next massive combat sports asset for TKO and our shareholders. Financially, of course, it's already a winning proposition for both the fighters and ultimately Also the business, but of course we don't consolidate. Now I'll allow Andrew to, or ask Andrew, not just allow you, I'll actually ask you to remind everybody of the JV that we have.

I accept. Look, Vic, you've heard us say this on numerous calls. We like the structure of the JV. We take calculated and intelligent risks. This is low risk, but allows us to have our fingerprints on a third combat sport vertical with a path for meaningful equity ownership that will ultimately enhance our firm value. We're here to build something. But we have no funding obligations and we don't take financial risk. It's really opportunity, cost of time and materials. And what you see so far is a product that's ahead of schedule and that energy and focus is paying off. As I said, the JV allows us to earn equity ownership and I can't stress this enough, participate in future value creation. and that's the JV. Now, somewhat tethered and associated to the JV is our ability to participate in, stage, work with, promote, sell the meteorites for super fights, which we get paid a fee depending upon the level of services that we ultimately provide. So that is implicit in our guide. You hear Mark talk about The Garcia-Benn event that's happening on the 12th of September and other events that we're associated with that would get a fee that appears in our corporate line item outside of the non-consolidating joint venture. So a lot of ways to win here, but it's early days.

And look, our reputation is that we know how to stage big events. We know how to build properties and assets like this. and Dana White.

At this time, thank you everyone for joining us on today's call. Operator, you can conclude the call.

Thank you. This concludes today's call. Thank you for attending. You may now disconnect.