TKO’s First Quarterly Results Show Strength in UFC, WWE

TKO Group Holdings announced its first quarterly earnings as a combined business, with WWE and TKO combining for a 6% rise in revenue for the full quarter while indicating early efforts at finding cost synergies between UFC and WWE are going well.

“Since launching TKO Sept. 12, our teams at WWE, UFC, and Endeavor have been focused on integration and executing our strategy,” TKO CEO Ari Emanuel said in a press release. “This includes identifying cost synergies at the high end of the range we guided… We remain bullish about TKO’s ability to accelerate growth and unlock long-term value for shareholders.” Emanuel is also CEO of Endeavor Group, which owns the majority equity of publicly traded TKO.

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For its third quarter ended September 30, UFC and WWE combined to generate a total of $684.8 million, a 6% gain over the year-ago period, according to data from S&P Global Market Intelligence. Since this is the quarter in which UFC and WWE combined to form TKO Group, the top-line results announced to investors are reported differently. TKO Group’s reported quarter consists of all of UFC’s quarter with just WWE’s performance after the merger closed on September 12. In that accounting, TKO generated revenue of $449.1 million, which the company said is an increase of 32%.

Standing alone, UFC revenue was up nearly 17% in the period, thanks to higher sponsorship sales and more live events, including two extra Fight Nights events in the period. WWE sales, meanwhile, were about 6% weaker in the quarter primarily due to lower consumer products licensing revenue, according to TKO Group. The consumer products dip appears to be related to the shift of merchandise sales from internal WWE to Fanatics, which could mean the decrease represents more of an accounting decline rather than showing significant weakness with end-buyers.

TKO posted a net loss for the quarter of $21.9 million, or 26 cents per diluted share. However, much of the loss is from the one-time costs associated with the acquisition of WWE and the subsequent spin off from Endeavor of UFC into TKO with WWE. Setting aside the transactions, the business would have posted a net profit of $66.4 million, according to the earnings release.

Management said the quarter saw a number of positives from the combination of the MMA and wrestling giants, including UFC’s first scheduled event in Saudi Arabia, to come in March, the $1.4 billion five-year broadcast rights deal for WWE SmackDown and a large sponsorship deal with Bud Light.

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