Endeavor Releases Third Quarter 2021 Results

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

Highlights

• Delivered best nine-month, year-to-date period in UFC history
• Representation revenue up significantly in Q3 as productions and touring events resume and brands increase spending
• Announced intent to acquire sports betting content and technology provider OpenBet to integrate with the Company’s IMG ARENA business; transaction expected to close H1 2022
• Increased 2021 revenue guidance from prior $4.8 to $4.85 billion range to between $4.89 and $4.95 billion
• Increased 2021 adjusted EBITDA guidance from prior $765 to $775 million range to between $835 and $845 million

Q3 2021 Consolidated Financial Results

• Revenue: $1.4 billion
• Net income: $63.6 million
• Adjusted EBITDA: $283.3 million

“We continue to capitalize on the elevated demand for premium content and live events coming out of the pandemic,” remarked Ariel Emanuel, CEO, Endeavor. “Given our unique positioning within the sports and entertainment industry and our ability to leverage powerful secular content trends, we see no signs of this momentum waning through the end of the year.”

Q3 2021 Segment Operating Results

• Owned Sports Properties segment revenue was $288.5 million, down $10.6 million compared to Q3 2020, attributable to a $25 million contract termination fee recognized in Q3 2020 that did not recur in 2021, as well as more events being held in Q3 2020 (caused by the shifting of events from Q2 due to COVID-19). This was partially offset by UFC’s continued strong growth across live events, residential and commercial Pay-Per-View, consumer products, licensing, and sponsorship, as well as additional PBR events held in the quarter. The segment’s adjusted EBITDA was $134.7 million.

• Events, Experiences & Rights segment revenue increased $62.1 million, to $446.3 million, compared to Q3 2020. The increase was primarily driven by an increase in event and sports media production revenue related to the return of live events with audiences, as well as the addition of the recently acquired NCSA within our IMG Academy business. This was partially offset by a decrease in media rights revenues, primarily due to the return to a normal schedule of European soccer matches in 2021, which was inflated in the prior year due to matches being pushed to Q3 as a result of COVID-19 – in addition to the expiration of two European soccer contracts in Q2 2021. The segment’s adjusted EBITDA improved $94.6 million, to $85 million, compared to Q3 2020. This was primarily driven by the growth in revenue and a decrease in direct operating costs.

• Representation segment revenue increased $481.1 million, to $664.7 million, compared to Q3 2020, during which most television and film productions and touring events came to a halt due to COVID-19. Growth in this segment was primarily attributable to a significant increase in Endeavor Content project deliveries, agency client commissions, and marketing and experiential activations. The segment’s adjusted EBITDA for the quarter increased $100.1 million, to $141.8 million, compared to Q3 2020.

2021 Annual Guidance

• Revenue is expected to be between $4.89 and $4.95 billion
• Adjusted EBITDA is expected to be between $835 and $845 million

Balance Sheet and Liquidity

At September 30, 2021, cash and cash equivalents totaled $1.029 billion, compared to $869.8 million at June 30, 2021. Total debt was $5.108 billion at September 30, 2021, compared to $5.351 billion at June 30, 2021. At September 30, 2021, cash and cash equivalents of $58.5 million and production related debt of $223 million were included in assets and liabilities held for sale, respectively.

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://events.q4inc.com/attendee/264118062

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 , the expected timing of the closing of the acquisition of the OpenBet business, 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 periods ended March 31, 2021 and in Amendment No. 1 to our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, as any such factors may be updated from time to time in its other filings 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 sports and entertainment 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 certain 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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