TKO Group Holdings Inc Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Brandon Ross - LightShed Partners - Analyst : I figured I'd start with what's most meaningful to your stock, which is going to be the UFC domestic deals. And I know you're in the exclusive period now with Disney. Do you expect the deal to get done within this window? Have you brought others into the window? And what are your latest thoughts overall on one versus multiple partners for this deal?

Question: Brandon Ross - LightShed Partners - Analyst : Great. And this one might be a little out of box. But with Trump in charge, there's clearly a lot of change. And we've heard some speculation about a potential repeal of the Ali Act. I wanted to get your thoughts on that. And to what extent your boxing plans would be dependent on such a appeal?

Question: Brandon Ross - LightShed Partners - Analyst : Here's your follow-up on the boxing. What are your plans? And then I'll shut up.

Question: Benjamin Swinburne - Morgan Stanley & Co. LLC - Analyst : I think for the year, you guys were able to do over 30% live event revenue growth for both UFC and WWE. And you talked about momentum continuing into '25. Maybe you could just spend a minute talking about the outlook for that combined revenue stream? What kind of growth you can deliver this year and sort of the strategy to maximize that opportunity? And then I have a follow-up.

Question: Benjamin Swinburne - Morgan Stanley & Co. LLC - Analyst : Yes, that's where I want to go next, Mark. Just -- and maybe the answer is it's too early. But one of the things that was so interesting about the Netflix deal was just the distribution outside the US of WWE Raw, but also the PLEs, I know it's -- again, it's early, so maybe not enough data. But I don't know if you or Nick (technical difficulty), but I'd be curious if you're seeing a noticeable benefit to engagement and ancillary monetization. You talked about doing more internationally this year, which makes sense. But has that shift to Netflix outside the United States registered yet in terms of the stuff you guys look at that matters to your business?

Question: Stephen Laszczyk - Goldman Sachs & Co. LLC - Analyst : Maybe first on sponsorship for Mark. I know you put out some longer-term goals out there for the sponsorship business. Maybe you could talk a little bit more about the opportunity as you see ahead of you over the next 12 months or so? You recently signed the Monster Energy deal. I think that was a record for you guys. How much opportunity is out there? Maybe to step up some larger sponsors this year or perhaps add new logos to the business over the next few quarters.

Question: Stephen Laszczyk - Goldman Sachs & Co. LLC - Analyst : That's helpful. And then since you mentioned the Kansas City Takeover, I was curious if I could ask a question just on the economics around that deal. It seems like there's a site fee component. There's a pretty big sponsorship component, as you mentioned, maybe some nice efficiencies from operating the events together. I guess how can we think about sizing those opportunities both this year. And then as we look out over the next couple of years, how many more opportunities do you think exists within the calendar as to the type of Takeovers between the three sports?

Question: David Karnovsky - JP Morgan Securities LLC - Analyst : Mark, given your executive role at both Endeavor and TKO, I wanted to see if you could shed some light on buying of TKO shares by EDR that we've seen since late December? Should investors read that as confidence in the future of TKO, are there some other factors maybe driving some of that purchasing? Any help would be great.

Question: David Karnovsky - JP Morgan Securities LLC - Analyst : Fair enough. And then just for Andrew, on the incremental UFC events abroad, I understood your lower margin just given the production cost, but to clarify, should we view them as overall EBITDA accretive to an Apex event? And then for Mark, just more broadly, what's kind of driving the decision to finally move more of those events out of Vegas?

Question: Peter Supino - Wolfe Research Securities - Analyst : A question about your guidance and then one about growth in the US On guidance, I wanted to ask about the implied incremental margins in the 2025 guide, it looked to be about 75%. And I don't want to sound like a spoiled child, that's a really good level. But given some of the onetime margin dilution in 2024, UFC 306 and the gap in your Raw revenue stream, some -- and we were expecting even better incrementals in the 2025 guidance. I wonder if you could talk about whether there are any expense pressures or new strategies that are showing up in Q4 margins and also in the 2025 guidance? I'll pause there.

Question: Peter Supino - Wolfe Research Securities - Analyst : I just wanted to ask about Netflix and specifically your live event business in the US is super successful and maybe pretty optimized. And so I wonder with all the engagement growth in Netflix, how do you turn that into more revenue? And then how dear does sponsorship to engagement growth?

Question: Ryan Gravett - UBS Securities LLC - Analyst : On WWE media rights, you called out timing of content deliveries in the quarter as having some impact. So just wondering if some of those timing-related headwinds should start to reverse and any update on the opportunity here for additional programming with Netflix? And then, Andrew, just any additional color on how we should think about growth in media rights revenues at UFC through the year as new Netflix markets get turned off?