Endeavor Releases Third Quarter 2023 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, 2023.

Highlights

• $1.344 billion in Q3 2023 revenue
• Closed UFC and WWE transaction to form TKO Group Holdings, Inc. (“TKO”), of which Endeavor holds a 51% controlling interest on a fully diluted basis
• Multiple ticket sales records at UFC and WWE live events
• Significant deals for sports and music talent
• Continued demand for betting data and premium sports content
• On track to complete by year-end our previously announced share repurchase program of up to $300 million
• Initiated quarterly cash dividend payments
• Announced initiation of formal review to evaluate strategic alternatives for the Company

Q3 2023 Consolidated Financial Results

• Revenue: $1.344 billion
• Net loss: $116.0 million
• Adjusted EBITDA: $311.6 million

“Our results in the third quarter demonstrate the strength of our diversified portfolio and leading position in sports and entertainment,” said Ariel Emanuel, CEO, Endeavor. “We are making good progress on our TKO integration efforts, setting ticket sales or attendance records at many of our live events, and continuing to benefit from demand for premium content and experiences. Our focus remains on maximizing shareholder value through capital return initiatives including our share repurchase program and dividend payments, as well as our recently announced evaluation of strategic alternatives.”

Segment Operating Results

• Owned Sports Properties segment revenue, which includes TKO, was $479.7 million for the quarter, up $77.5 million, or 19.3%, compared to the third quarter of 2022. Growth was primarily driven by higher media rights fees from contractual increases, as well as two additional Fight Nights in the quarter, higher live event revenue, and increases in sponsorships and site fees. Revenue growth was also driven by the acquisition of WWE, which contributed $52 million of revenue for the post-closing period from September 12, 2023 through September 30, 2023. Revenue was partially offset by $33 million included in the same prior year period from Diamond Baseball Holdings, which was sold in September 2022. The segment’s Adjusted EBITDA was $237.4 million, up $41.7 million, or 21.3%, year-over-year.
• Events, Experiences & Rights segment revenue was $367.1 million for the quarter, down $27.1 million, or 6.9%, compared to the third quarter of 2022. Segment revenue was impacted by the sale of IMG Academy in June 2023 and partially offset by new contracts in IMG’s media production business, certain biennial and quadrennial events like the Ryder Cup and Rugby World Cup, and live event revenue such as Barrett-Jackson New Orleans, as well as the acquisition of The Armory Show this past July. The segment’s Adjusted EBITDA was $29.8 million for the quarter, down $15.7 million, or 34.4%, compared to the third quarter of 2022.
• Representation segment revenue was $385.6 million for the quarter, down $2.7 million, or 0.7%, compared to the third quarter of 2022. Segment revenue was impacted by the WGA and SAG-AFTRA strikes, partially offset by the music and sports verticals at WME, the delivery of projects in Endeavor’s nonscripted content production business, as well as increases at 160over90, including the acquisition of XYZ, a London-based experiential marketing agency. Adjusted EBITDA was $96.3 million for the quarter, down $36.6 million, or 27.5%, compared to the third quarter of 2022.
• Sports Data & Technology segment revenue was $124.8 million, up $78.1 million, or 167.2%, compared to the third quarter of 2022. Growth was driven by the inclusion of OpenBet, which we acquired in September 2022, as well as growth at IMG ARENA. The segment’s Adjusted EBITDA was $24 million for the quarter, up $19.8 million, or 476.5%, year-over-year.

Balance Sheet and Liquidity

At September 30, 2023, cash and cash equivalents totaled $1.338 billion compared to $1.616 billion at June 30, 2023. Total debt was $5.046 billion at September 30, 2023, compared to $5.110 billion at June 30, 2023.

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 Relations site at investor.endeavorco.com.

Webcast Details

Endeavor will host an audio webcast to discuss its results and provide a business update at 5 a.m. PT / 8 a.m. ET Wednesday, November 8. The event can be accessed at: https://events.q4inc.com/attendee/398127204

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. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including the Company’s initiatives to create stockholder value and the timing of completion of repurchases under its share repurchase program. The words “believe,” “may,” “will,” “estimate,” “potential,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “target,” and similar expressions are intended to identify forward-looking statements, though not all forward-looking statements use these words or expressions. 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: 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; impacts from labor disputes and work stoppages by unions and guilds such as the Writers Guild of America and SAG-AFTRA, of which many of Endeavor clients are members; 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 gaming business and applicable regulatory requirements; risks related to Endeavor’s organization and structure; risks related to the business combination of UFC and WWE into TKO; and other important factors discussed in Part I, Item 1A “Risk Factors” in Endeavor’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as any such factors may be updated from time to time in the Company’s other filings with the SEC, including without limitation, the Company’s Quarterly Report on Form 10-Q for the quarterly periods ended March 31, 2023, June 30, 2023 and September 30, 2023, 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 Endeavor network specializes in talent representation through entertainment agency WME; sports operations and advisory, event management, media production and distribution, and brand licensing through IMG; live event experiences and hospitality through On Location; full-service marketing through global cultural marketing agency 160over90; and sports data and technology through IMG ARENA and OpenBet. Endeavor is also the majority owner of TKO Group Holdings, Inc. (NYSE: TKO), a premium sports and entertainment company comprising UFC and WWE.

Website Disclosure

Investors and others should note that Endeavor announces material financial and operational information to its investors using press releases, SEC filings and public conference calls and webcasts, as well as its Investor Relations site at investor.endeavorco.com. Endeavor may also its our website as a distribution channel of material company information. 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 and Adjusted EBITDA Margin.

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, net gains on the sale of businesses, tax receivable agreement liability adjustment, 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 and the tax receivable agreement, which may not be comparable with other companies based on our tax and corporate structure.

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

Adjusted EBITDA, and Adjusted EBITDA margin 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 and Adjusted EBITDA margin 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 and Adjusted EBITDA margin along with other comparative tools, together with GAAP measurements, to assist in the evaluation of operating performance.

Adjusted EBITDA and Adjusted EBITDA margin 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 and Adjusted EBITDA margin 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 and Adjusted EBITDA margin 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.

Contacts

Investors: investor@endeavorco.com
Press: press@endeavorco.com

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