TKO Group Holdings, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; unaudited. TKO operates UFC and WWE across media rights and content, live events, sponsorship, and consumer products licensing. WWE joined the consolidated business in September 2023, so Q1 2023 results primarily reflect UFC and are not directly comparable with Q1 2024.
Financial performance
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | $629.7 million | $306.7 million |
| Operating income (loss) | $(210.3) million | $146.1 million |
| Net income (loss) | $(249.5) million | $88.0 million |
| Net loss attributable to TKO Group Holdings, Inc. | $(103.8) million | Not applicable |
| Basic and diluted loss per Class A share | $(1.26) | Not applicable |
| Adjusted EBITDA (non-GAAP) | $282.2 million | $172.6 million |
| Adjusted EBITDA margin (non-GAAP) | 45% | 56% |
| Cash provided by operating activities | $59.3 million | $69.7 million |
| Cash used in investing activities | $(36.2) million | $(4.6) million |
| Cash used in financing activities | $(10.6) million | $(109.6) million |
Revenue increased 105%, principally because WWE contributed $316.7 million; UFC revenue rose 2% to $313.0 million. UFC Adjusted EBITDA was $195.1 million (62% margin); WWE contributed $140.2 million (44% margin); Corporate Adjusted EBITDA was $(53.1) million.
The GAAP loss included a $335.0 million charge for UFC antitrust lawsuit settlements, recorded in selling, general and administrative expenses. SG&A totaled $531.9 million versus $56.3 million a year earlier. Depreciation and amortization rose to $107.2 million, including $81.6 million of intangible-asset amortization. Interest expense, net, was $64.5 million. The $25.5 million tax benefit included a $39.6 million discrete benefit related to the settlement.
Financial position and liquidity
At March 31, 2024, cash and cash equivalents were $245.8 million; current assets were $581.8 million and current liabilities $590.5 million. Total debt carrying value was $2.73 billion, comprising $2.72 billion of first-lien term loans and $31.5 million of secured commercial loans. The term loan bears floating interest and had an 8.34% rate at quarter-end; it matures in April 2026. The company reported no revolver borrowings or letters of credit at March 31. Finance and operating lease liabilities are additional obligations.
Management said cash, operating cash flow, and available credit are expected to fund working capital and commitments for at least the next 12 months. TKO expects to refinance its term loans before maturity. Operating cash flow included significant increases in accrued and other liabilities, primarily reflecting the antitrust settlement and bonus-payment timing; it should not be viewed as a direct measure of recurring earnings.
Material changes, outlook, and risks
- Settlement: TKO agreed to pay $335.0 million to settle the Le and Johnson UFC antitrust cases, subject to court approval. The company expected $200.0 million within 12 months of quarter-end and $135.0 million in April 2025. The full amount was accrued at March 31.
- Subsequent share purchases and borrowing: In April, Endeavor purchased 1,642,970 TKO shares from Vincent McMahon for $146.2 million. TKO separately purchased and retired 1,853,724 shares for $165.0 million, funded with approximately $150.0 million of revolver borrowings and cash. These transactions occurred after quarter-end. On May 1, TKO extended the revolver’s maturity by 12 months, to October 29, 2025.
- Integration and costs: The company continued a cost-reduction and integration program, recording $11.6 million of restructuring charges in the quarter. Corporate Adjusted EBITDA declined to $(53.1) million, reflecting WWE-related corporate costs, higher compensation, and public-company expenses.
- Other legal matters: The filing describes WWE-related regulatory inquiries and litigation, including a former employee’s lawsuit and consolidated former-stockholder litigation. Outcomes and potential financial effects were not stated as clear or estimable.
- Interest-rate exposure: Management estimated that a 1 percentage-point increase in rates, holding debt levels constant, would increase annual interest expense by approximately $27 million. Floating-rate debt and refinancing conditions are material liquidity risks.
- Outlook: The filing provides no specific revenue or earnings guidance. Management’s liquidity outlook and refinancing expectations are forward-looking and subject to business, market, integration, legal, and other risks.
Important facts for investors to verify
- Track court approval, payment timing, tax treatment, and any further developments in the $335.0 million UFC settlement.
- Review the effect of post-quarter share purchases and the $150.0 million revolver borrowing on cash, debt, share count, and ownership.
- Assess debt service and refinancing risk ahead of the April 2026 term-loan maturity, including exposure to floating rates.
- Separate UFC’s year-over-year performance from WWE’s newly consolidated contribution; reported growth and margin comparisons are not like-for-like.
- Monitor whether Adjusted EBITDA translates into cash generation; it is a non-GAAP measure and excludes, among other items, legal settlements, interest, taxes, and certain costs.
- Follow WWE-related investigations and litigation, as well as integration costs and the company’s ability to realize expected operating benefits.