TKO Group Holdings, Inc. - Q1 2026 10-Q Summary
Business Context and Reporting Period
This Quarterly Report on Form 10-Q covers the three-month period ended March 31, 2026. TKO Group Holdings, Inc. (TKO) operates as a premium sports and entertainment company comprising three reportable segments: UFC (Ultimate Fighting Championship), WWE (World Wrestling Entertainment), and IMG (including On Location and Professional Bull Riders). The reporting period reflects the full impact of the Endeavor Asset Acquisition (completed February 28, 2025), which was treated as a common control transaction, resulting in the retrospective recasting of prior period financial data.
Key Financial Metrics
| Metric (in millions) | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenue | $1,596.9 | $1,268.8 |
| Operating Income | $338.5 | $237.4 |
| Net Income (GAAP) | $249.8 | $165.6 |
| Net Income Attributable to TKO | $89.4 | $58.4 |
| Adjusted EBITDA | $549.8 | $417.4 |
| Operating Cash Flow | $694.5 | $162.8 |
| Total Debt (Principal) | $4,671.2 | $3,783.2 |
| Cash & Restricted Cash | $1,726.2 | $629.4 |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 26% year-over-year, driven by strong performance across all segments.
- IMG: Revenue surged 38% ($179.1M increase), primarily due to $177.5M in revenue from On Location related to the 2026 Milano Cortina Olympics.
- WWE: Revenue rose 22% ($84.2M increase), fueled by a $47.2M increase in live event revenue (Royal Rumble in Riyadh) and higher media rights fees from Netflix and ESPN.
- UFC: Revenue grew 12% ($41.5M increase), led by a new content distribution agreement with Paramount, despite two fewer Fight Night events.
- Profitability: Operating income increased 43% to $338.5M. Adjusted EBITDA margin improved to 34% from 33% in the prior year.
- Debt Structure: On March 10, 2026, TKO amended its First Lien Credit Agreement to add a $900 million incremental term loan and upsize its revolving credit facility to $350 million. Total debt principal increased to approximately $4.67 billion.
- Capital Return: The company repurchased approximately $838.3 million of Class A common stock, including an $800 million Accelerated Share Repurchase (ASR) agreement. Quarterly dividends increased to $0.78 per share from $0.38 in the prior year.
Guidance, Outlook, and Risks
Management Commentary: Management highlighted the successful integration of the IMG business and the positive impact of new media rights deals (Paramount for UFC/PBR, Netflix/ESPN for WWE). The company continues to prioritize capital returns through share repurchases and dividends.
Outlook: TKO expects liquidity sources (cash on hand, operating cash flows, and credit facilities) to be sufficient to fund operations and commitments for at least the next 12 months. The company has authorized an additional $1.0 billion in share repurchases incremental to its existing program.
Risks and Contingencies:
- Legal Proceedings: Significant ongoing litigation includes antitrust class actions against UFC (Johnson, Cirkunovs, Davis, Costantino cases) and stockholder litigation regarding the TKO Transactions and the Endeavor Asset Acquisition. A $375 million settlement for the "Le" antitrust case was completed in June 2025.
- IMG Litigation: Ongoing antitrust claims in Italy regarding Serie A/B media rights; however, a settlement was reached in April 2026 to be paid directly by Endeavor Group Holdings under indemnification obligations.
- Market Risks: Exposure to floating interest rates on debt and foreign currency fluctuations, particularly the British Pound.
Investor Verification Checklist
- Debt Covenants: Verify compliance with the First Lien Leverage Ratio (8.25-to-1) and Debt Service Coverage Ratio (1.15-to-1) given the increased debt load from the $900M incremental loan.
- ASR Settlement: Monitor the final settlement of the $800M Accelerated Share Repurchase agreement expected by June 2026 to determine the final share count reduction.
- Legal Exposure: Track developments in the UFC antitrust lawsuits (Johnson, Cirkunovs, Davis) and the WWE merger litigation trial scheduled for June 2026.
- IMG Integration: Assess the sustainability of the Q1 2026 revenue spike from the Milano Cortina Olympics and its impact on future Adjusted EBITDA margins.
- Non-Controlling Interests: Review the allocation of net income to non-controlling interests (Endeavor/Silver Lake), which accounted for $160.4M of the $249.8M total net income.