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 June 30, 2023.
Highlights
- $1.436 billion in Q2 2023 revenue, reflecting year-over-year growth across all four reporting segments
- Transaction to combine UFC and WWE within TKO Group Holdings, Inc. expected to close in mid- to late September 2023
- Completed sale of IMG Academy at an enterprise value of $1.25 billion, allowing the Company to commence share repurchases of up to $300 million of Class A common stock in the third quarter
- Expect to begin making quarterly cash dividend payments at the end of Q3
Q2 2023 Consolidated Financial Results
- Revenue: $1.436 billion
- Net income: $666.5 million
- Adjusted EBITDA: $304.9 million
“We delivered solid results this quarter at Endeavor and are closing in on the launch of TKO Group Holdings,” said Ariel Emanuel, CEO, Endeavor. “Our share repurchase plan and dividend payment initiatives will begin in the third quarter, and we remain focused on maintaining prudent capital allocation and delivering long term sustainable growth for the company.”
Segment Operating Results
- Owned Sports Properties segment revenue was $340.1 million for the quarter, up $8.2 million, or 2.5%, compared to the second quarter of 2022. Growth was primarily driven by higher live event revenue from having two more events in the current year with live audiences, higher media rights fees and sponsorships, and an increase in commercial pay-per-view, all at UFC. Revenue was partially offset by $30 million from Diamond Baseball Holdings included in the prior year that was sold in September 2022. The segment’s Adjusted EBITDA was $179.2 million, up $18.0 million, or 11.1%, year-over-year.
- Events, Experiences & Rights segment revenue was $591.1 million for the quarter, up $23.3 million, or 4.1%, compared to the second quarter of 2022. Growth was primarily driven by new media production deals, including with Major League Soccer; a strong Madrid Open tennis tournament; as well as Barrett-Jackson, which was acquired in August 2022; and growth at IMG Academy. Growth was partially offset by On Location’s music business and Endeavor Streaming. The segment’s Adjusted EBITDA was $76.6 million for the quarter, down $16.0 million, or 17.3%, year-over-year.
- Representation segment revenue was $381.1 million for the quarter, up $23.2 million, or 6.5%, compared to the second quarter of 2022. Growth was primarily attributable to the delivery of projects in Endeavor’s nonscripted content production business, as well as increases across our fashion business and new projects and increased spend from 160over90’s corporate clients, partially offset by the impact of the Writers Guild of America strike on WME. Adjusted EBITDA was $107.1 million for the quarter, down $4.1 million, or 3.7%, year-over-year.
- Sports Data & Technology segment revenue was $130.6 million, up $70.2 million, or 116.3%, compared to the second 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 $13.7 million for the quarter, down $1.8 million, or 11.7%, year-over-year. The segment was affected by certain costs at IMG ARENA incurred in advance of the sales cycle.
Balance Sheet and Liquidity
At June 30, 2023, cash and cash equivalents totaled $1.616 billion compared to $718.7 million at March 31, 2023. Total debt was $5.110 billion at June 30, 2023, compared to $5.151 billion at March 31, 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 2 p.m. PT / 5 p.m. ET today. The event can be accessed at: https://events.q4inc.com/attendee/878718431
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 guidance for full year 2023, its expected long-term value and market position, commencement of repurchases under the share repurchase authorization and the timing thereof and the expected declaration and payment of a quarterly cash dividend and timing thereof. 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; 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 period ended March 31, 2023 and its Quarterly Report on Form 10-Q for the quarterly period ended June 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 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. We may also use 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.
Consolidated Statements of Operations (Unaudited) (In thousands, except share and per share data) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue | $ | 1,436,212 | $ | 1,312,515 | $ | 3,033,049 | $ | 2,786,278 | ||||||||
| Operating expenses: | ||||||||||||||||
| Direct operating costs | 584,014 | 508,385 | 1,308,296 | 1,203,026 | ||||||||||||
| Selling, general and administrative expenses | 632,671 | 587,499 | 1,301,884 | 1,127,705 | ||||||||||||
| Insurance recoveries | — | — | — | (993 | ) | |||||||||||
| Depreciation and amortization | 61,078 | 65,612 | 127,829 | 131,606 | ||||||||||||
| Total operating expenses | 1,277,763 | 1,161,496 | 2,738,009 | 2,461,344 | ||||||||||||
| Operating income | 158,449 | 151,019 | 295,040 | 324,934 | ||||||||||||
| Other (expense) income: | ||||||||||||||||
| Interest expense, net | (90,307 | ) | (62,505 | ) | (175,404 | ) | (121,777 | ) | ||||||||
| Tax receivable agreement liability adjustment | 10,174 | 2,405 | 12,518 | (51,092 | ) | |||||||||||
| Other income (expense), net | 741,657 | (6,133 | ) | 766,090 | 453,808 | |||||||||||
| Income before income taxes and equity losses of affiliates | 819,973 | 84,786 | 898,244 | 605,873 | ||||||||||||
| Provision for (benefit from) income taxes | 140,441 | 2,699 | 175,911 | (14,535 | ) | |||||||||||
| Income before equity losses of affiliates | 679,532 | 82,087 | 722,333 | 620,408 | ||||||||||||
| Equity losses of affiliates, net of tax | (12,997 | ) | (39,867 | ) | (19,543 | ) | (60,522 | ) | ||||||||
| Net income | 666,535 | 42,220 | 702,790 | 559,886 | ||||||||||||
| Less: Net income attributable to non-controlling interests | 263,361 | 16,414 | 291,585 | 214,534 | ||||||||||||
| Net income attributable to Endeavor Group Holdings, Inc. | $ | 403,174 | $ | 25,806 | $ | 411,205 | $ | 345,352 | ||||||||
| Earnings per share of Class A common stock: | ||||||||||||||||
| Basic | $ | 1.34 | $ | 0.09 | $ | 1.37 | $ | 1.27 | ||||||||
| Diluted | $ | 1.29 | $ | 0.09 | $ | 1.35 | $ | 1.24 | ||||||||
| Weighted average number of shares used in computing earnings per share: | ||||||||||||||||
| Basic | 301,011,276 | 281,623,228 | 296,499,094 | 275,092,484 | ||||||||||||
| Diluted(1) | 311,046,135 | 449,733,965 | 299,810,998 | 446,419,024 | ||||||||||||
| (1) The diluted weighted average number of shares of 311,046,135 and 299,810,998 for the three and six months ended June 30, 2023, respectively, includes weighted average Class A common shares outstanding, plus an assumed exchange of Endeavor Profits Units into 1,031,047 and 872,989 shares of the Company’s Class A common stock, respectively, and additional shares from RSUs, Stock Options, and Phantom Units, as noted in the table below: | ||||||||||||||||
| Weighted average Class A Common Shares outstanding - Basic | 301,011,276 | 296,499,094 | ||||||||||||||
| Additional shares assuming exchange of all Endeavor Profits Units | 1,031,047 | 872,989 | ||||||||||||||
| Additional shares from RSUs, stock options and Phantom Units, as calculated using the treasury stock method | 2,244,297 | 2,438,915 | ||||||||||||||
| Additional shares assuming redemption of redeemable non-controlling interests | 6,759,515 | — | ||||||||||||||
| Weighted average Class A Common Shares outstanding - Diluted | 311,046,135 | 299,810,998 | ||||||||||||||
| Securities that are anti-dilutive for the three and six months ended June 30, 2023, are additional shares based on an assumed exchange of Endeavor Manager Units and Endeavor Operating Units into 157,319,043 shares, as well as additional shares from Stock Options, RSUs and redeemable non-controlling interests. | ||||||||||||||||
Segment Results (Unaudited) (In thousands) | |||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Revenue: | |||||||||||||||||
| Owned Sports Properties | $ | 340,088 | $ | 331,930 | $ | 693,377 | $ | 628,619 | |||||||||
| Events, Experiences & Rights | 591,078 | 567,808 | 1,391,864 | 1,348,743 | |||||||||||||
| Representation | 381,149 | ||||||||||||||||
