Endeavor Releases Second Quarter 2021 Results

BEVERLY HILLS, Calif.–(BUSINESS WIRE)–Endeavor Group Holdings, Inc. (NYSE: EDR), a global entertainment, sports and content company, today released its financial results for the quarterly period ended June 30, 2021.

Q2 2021 Highlights:

• Revenue increased to $1.1 billion, up approximately $650 million compared with Q2 of 2020
• Q2 marked by a return of live events and audiences, as well as an increase in both productions and content deliveries
• UFC’s Q2 performance – including three sold-out, arena record Pay-Per-View events – led to biggest first half in UFC history
• $600 million repayment of outstanding debt in advance of Q3 target

“Despite continued challenges brought on by the pandemic, our company once again demonstrated resilience, due in large part to our global portfolio of premium assets and the creativity of our employees and partners,” remarked Ariel Emanuel, CEO, Endeavor. “As you look at the secular trends defining our industries – marked by the growing demand for content, the increased value of the talent and brands behind that content, and the desire of people to come together around live events and experiences – Endeavor remains firmly and uniquely positioned for a strong second half of 2021.”

Q2 2021 Segment Operating Results

• At the segment level, Owned Sports Properties revenue increased $106.6 million, or 70.0%, to $258.9 million, compared to the second quarter of 2020. The increase was primarily driven by media rights fees and an increased number of UFC and PBR events, which included higher ticket sales due to the lifting of attendance restrictions in the quarter. The segment’s Adjusted EBITDA was $132.3 million, up $66.8 million, or roughly double that of the second quarter of 2020, primarily driven by the strong revenue growth.

• Events, Experiences & Rights segment revenue increased $408.8 million, to $528.7 million, compared to the second quarter of 2020. The increase was primarily driven by higher media rights fees due to the return of a full schedule of European soccer matches in 2021. The segment’s Adjusted EBITDA improved $79.5 million, to $36.8 million, compared to the second quarter of 2020, primarily driven by the growth in revenue, and partially offset by the increase in operating expenses to support the gradual return of live events.

• Representation segment revenue increased $135.4 million, or 70.2%, to $328.2 million, compared to the second quarter of 2020, primarily attributed to the increase in project deliveries at Endeavor Content and a gradual growth in client commissions. The segment’s Adjusted EBITDA for the quarter increased $9.6 million, or 18.5%, to $61.7 million, compared to the second quarter of 2020.

2021 Annual Guidance

• Revenue is expected to be between $4.8 and $4.85 billion
• Adjusted EBITDA is expected to be between $765 and $775 million

Balance Sheet and Liquidity Highlights

At June 30, 2021, cash and cash equivalents totaled $869.8 million, compared to $880.9 million at March 31, 2021. Following a $600 million repayment of outstanding debt in the quarter, total debt was $5.351 billion at June 30, 2021, compared to $5.872 billion at March 31, 2021.

For further information regarding the Company’s financial results, as well as certain non-GAAP financial measures, and the reconciliations thereof, please refer to the following pages of this release or visit the Company’s Investor Relation site at investor.endeavorco.com.

Webcast Details

Endeavor will host an audio webcast to discuss its results and provide a business update at 1:30 p.m. PT / 4:30 p.m. ET today. The event can be accessed at:

https://event.on24.com/wcc/r/3296469/49809CCF1E11EA1E0190986F795AE220

The link to the webcast, as well as a recording, will also be available within the News/Events section of investor.endeavorco.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that do not relate to matters of historical fact should be considered forward-looking statements, including the Company’s guidance for full year 2021 and the expected benefit resulting from the Company’s acquired businesses. These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees and involve known and unknown risks, uncertainties and other important factors that may cause actual results, performance or achievements to be materially different from what is expressed or implied by the forward-looking statements, including, but not limited to: the impact of the COVID-19 global pandemic on Endeavor’s business, financial condition, liquidity and results of operations; changes in public and consumer tastes and preferences and industry trends; Endeavor’s ability to adapt to or manage new content distribution platforms or changes in consumer behavior; Endeavor’s dependence on the relationships of its management, agents, and other key personnel with clients; Endeavor’s dependence on key relationships with television and cable networks, satellite providers, digital streaming partners, corporate sponsors, and other distribution partners; risks related to Endeavor’s organization and structure; and other important factors discussed in Part II, Item 1A “Risk Factors” in Endeavor’s Quarterly Report on Form 10-Q for the period ended March 31, 2021, as any such factors may be updated from time to time in its other filings with the SEC, including its Quarterly Report on Form 10-Q for the period ended June 30, 2021 to be filed with the SEC, accessible on the SEC’s website at www.sec.gov and Endeavor’s Investor Relations site at investor.endeavorco.com. Forward-looking statements speak only as of the date they are made and, except as may be required under applicable law, Endeavor undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

We refer to certain financial measures that are not recognized under United States generally accepted accounting principles (“GAAP”). Please see “Note Regarding Non-GAAP Financial Measures” and the reconciliation tables below for additional information and a reconciliation of the Non-GAAP financial measures to the most comparable GAAP financial measures.

About Endeavor

Endeavor is a global entertainment, sports and content company, home to many of the world’s most dynamic and engaging storytellers, brands, live events and experiences. The company is comprised of industry leaders including entertainment agency WME; sports, fashion, events and media company IMG; and premier mixed martial arts organization UFC. The Endeavor network specializes in talent representation, sports operations & advisory, event & experiences management, media production & distribution, experiential marketing and brand licensing.

Website Disclosure

Investors and others should note that we announce material financial and operational information to our investors using press releases, SEC filings and public conference calls webcasts, as well as our Investor Relations site at investor.endeavorco.com. In addition, you may automatically receive email alerts and other information about Endeavor when you enroll your email address by visiting the “Investor Email Alerts” option under the Resources tab on investor.endeavorco.com.

Note Regarding Non-GAAP Financial Measures

This press release includes financial measures that are not calculated in accordance with United States generally accepted accounting principles (“GAAP”), including Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Net Income.

Adjusted EBITDA is a non-GAAP financial measure and is defined as net income (loss), excluding income taxes, net interest expense, depreciation and amortization, equity-based compensation, merger, acquisition and earn-out costs, certain legal costs, restructuring, severance and impairment charges, certain non-cash fair value adjustments, certain equity earnings, COVID-19 related expenses, and certain other items when applicable. Adjusted EBITDA margin is a non-GAAP financial measure defined as Adjusted EBITDA divided by Revenue.

Management believes that Adjusted EBITDA is useful to investors as it eliminates the significant level of non-cash depreciation and amortization expense that results from our capital investments and intangible assets recognized in business combinations, and improves comparability by eliminating the significant level of interest expense associated with our debt facilities, as well as income taxes, which may not be comparable with other companies based on our tax structure.

Adjusted EBITDA and Adjusted EBITDA margin are used as the primary bases to evaluate our consolidated operating performance.

Adjusted Net Income is a non-GAAP financial measure and is defined as net income (loss) attributable to Endeavor Operating Company adjusted to exclude our share (excluding those relating to non-controlling interests) of the adjustments used to calculate Adjusted EBITDA, other than income taxes, net interest expense and depreciation, on an after-tax basis, the release of tax valuation allowances and other tax items.

Adjusted Net Income adjusts income or loss attributable to the Company for items that are not considered to be reflective of our operating performance. Management believes that such non-GAAP information is useful to investors and analysts as it provides a better understanding of the performance of our operations for the periods presented and, accordingly, facilitates the development of future projections and earnings growth prospects.

Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net Income have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

• they do not reflect every cash expenditure, future requirements for capital expenditures, or contractual commitments;

• Adjusted EBITDA does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt;

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net Income do not reflect any cash requirement for such replacements or improvements; and they are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows.

We compensate for these limitations by using Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Net Income along with other comparative tools, together with GAAP measurements, to assist in the evaluation of operating performance.

Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Net Income should not be considered substitutes for the reported results prepared in accordance with GAAP and should not be considered in isolation or as alternatives to net income (loss), as indicators of our financial performance, as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations. Although we use Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Net Income as financial measures to assess the performance of our business, such use is limited because it does not include certain material costs necessary to operate our business. Our presentation of Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Net Income should not be construed as indications that our future results will be unaffected by unusual or nonrecurring items. These non-GAAP financial measures, as determined and presented by us, may not be comparable to related or similarly titled measures reported by other companies.

Set forth below are reconciliations of our most directly comparable financial measures calculated in accordance with GAAP to these non-GAAP financial measures on a consolidated basis.

A reconciliation of the Company’s Adjusted EBITDA guidance to the most directly comparable GAAP financial measure cannot be provided without unreasonable efforts and is not provided herein because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including adjustments that are made for equity-based compensation expense, restructuring charges, gains, losses and impairments related to acquisitions and divestitures of businesses, non-cash fair value adjustments of embedded foreign currency derivatives, equity method earnings or losses and fair value adjustments for investments, certain tax items and other adjustments reflected in our reconciliation of historical Adjusted EBITDA, the amounts of which, could be material.

Contacts

Investors: investor@endeavorco.com

Press:

Christian Muirhead

press@endeavorco.com

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