v3.25.1
SEGMENT INFORMATION
 3 Months Ended
Mar. 31, 2025
SEGMENT INFORMATION [Abstract]  
SEGMENT INFORMATION

17. SEGMENT INFORMATION

Prior to the Endeavor Asset Acquisition, the Company identified two reportable segments: UFC and WWE, to align with how the Company’s chief operating decision maker (the “CODM”), the Chief Executive Officer, managed the businesses, evaluated financial results, and made key operating decisions. Subsequent to the Endeavor Asset Acquisition and effective February 28, 2025, the Company identified three reportable segments: UFC, WWE and IMG to align with how the Company’s CODM manages the businesses, evaluates financial results, and makes key operating decisions. The UFC segment consists entirely of the operations of the Company's UFC business and the WWE segment consists entirely of the operations of the Company's WWE business. The IMG segment consists of the operations of the IMG Business and On Location.

The Company also reports the results for the “Corporate” group. The Corporate group reflects operations not allocated to the UFC or WWE segments and primarily consists of general and administrative expenses. As a result of the Endeavor Asset Acquisition, the Company determined that the operations of PBR would be included within the “Corporate” group which was renamed to “Corporate and Other”. The Corporate and Other group includes operations not allocated to the IMG segment which primarily consists of general and administrative expenses. These expenses largely relate to corporate activities, including information technology, facilities, legal, human resources, finance, accounting, treasury, investor relations, corporate communications, community relations and compensation to TKO’s management and board of directors, which support all reportable segments. Corporate expenses also include service fees paid by the Company to EGH and its subsidiaries related to certain corporate activities as well as certain revenue generating activities under the Services Agreement. On the closing date of the Endeavor Asset Acquisition, the Services Agreement between EGH and TKO OpCo was terminated and the Transition Services Agreement was entered into between the EGH Parties, TWI and the TKO Parties.

As disclosed within Note 2, Summary of Significant Accounting Policies, the historical financial data includes the recast combined results of TKO and the Acquired Businesses for all periods prior to February 28, 2025. All prior period amounts related to the segment change have been retrospectively reclassified to conform to the new presentation.

The profitability measure employed by the Company’s CODM for allocating resources and assessing operating performance is Adjusted EBITDA. The Company defines Adjusted EBITDA as net income, excluding income taxes, net interest expense, depreciation and amortization, equity-based compensation, merger and acquisition costs, certain legal costs, restructuring, severance and impairment charges, and certain other items when applicable. Adjusted EBITDA includes amortization expenses directly related to supporting the operations of the Company’s segments, including content production asset amortization. The Company’s CODM considers budget-to-actual and quarter-over-quarter variances when making decisions about allocating capital and personnel to the segments. The Company believes the presentation of Adjusted EBITDA is relevant and useful for investors because it allows investors to view the Company’s segment performance in the same manner as the Company’s CODM to evaluate segment performance and make decisions about allocating resources. Additionally, the Company believes that Adjusted EBITDA is a primary measure used by media investors, analysts and peers for comparative purposes.

The Company does not disclose assets by segment information. The Company does not provide assets by segment information to the Company’s CODM, as that information is not typically used in the determination of resource allocation and assessing business

performance of each reportable segment. A significant portion of the Company’s assets following the TKO Transactions are comprised of goodwill and intangible assets arising from the TKO Transactions.

The following tables present summarized financial information for each of the Company’s reportable segments (in thousands):

 

 

 

Three Months Ended

 

 

 

March 31,

 

UFC:

 

2025

 

 

2024

 

Revenue

 

$

359,747

 

 

$

312,990

 

Direct operating costs (1)

 

 

89,672

 

 

 

82,315

 

Selling, general and administrative expenses (1)

 

 

42,682

 

 

 

35,592

 

Adjusted EBITDA

 

$

227,393

 

 

$

195,083

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

WWE:

 

2025

 

 

2024

 

Revenue

 

$

391,540

 

 

$

316,721

 

Direct operating costs (1)

 

 

122,068

 

 

 

100,458

 

Selling, general and administrative expenses (1)

 

 

75,532

 

 

 

76,050

 

Adjusted EBITDA

 

$

193,940

 

 

$

140,213

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

IMG:

 

2025

 

 

2024

 

Revenue

 

$

476,268

 

 

$

549,652

 

Direct operating costs (1)

 

 

325,017

 

 

 

378,560

 

Selling, general and administrative expenses (1)

 

 

77,790

 

 

 

89,809

 

Adjusted EBITDA

 

$

73,461

 

 

$

81,283

 

 

(1)
Direct operating costs and selling, general and administrative expenses included in the measure of Adjusted EBITDA for each segment excludes reconciling items included in the reconciliation of segment profitability below.

Revenue

 

 

Three Months Ended

 

 

March 31,

 

 

2025

 

 

2024

 

UFC

 

$

359,747

 

 

$

312,990

 

WWE

 

 

391,540

 

 

 

316,721

 

IMG

 

 

476,268

 

 

 

549,652

 

Total revenue from reportable segments

 

$

1,227,555

 

 

$

1,179,363

 

Corporate and Other

 

 

54,377

 

 

 

52,229

 

Eliminations

 

 

(13,132

)

 

 

(9,144

)

Total revenue

 

$

1,268,800

 

 

$

1,222,448

 

 

 

 

Reconciliation of segment profitability

 

 

Three Months Ended

 

 

March 31,

 

 

2025

 

 

2024

 

UFC

 

$

227,393

 

 

$

195,083

 

WWE

 

 

193,940

 

 

 

140,213

 

IMG

 

 

73,461

 

 

 

81,283

 

Total Adjusted EBITDA from reportable segments

 

 

494,794

 

 

 

416,579

 

Corporate and Other

 

 

(77,416

)

 

 

(77,705

)

Total Adjusted EBITDA

 

 

417,378

 

 

 

338,874

 

Reconciling items:

 

 

 

 

 

 

Equity earnings of affiliates

 

 

(2,524

)

 

 

(2,807

)

Interest expense, net

 

 

(44,765

)

 

 

(61,177

)

Depreciation and amortization

 

 

(100,535

)

 

 

(122,069

)

Equity-based compensation expense (1)

 

 

(30,271

)

 

 

(32,180

)

Merger and acquisition costs (2)

 

 

(39,772

)

 

 

(520

)

Certain legal costs (3)

 

 

(6,458

)

 

 

(345,199

)

Restructuring, severance and impairment (4)

 

 

(1,519

)

 

 

(9,549

)

Other adjustments (5)

 

 

(7,320

)

 

 

(8,364

)

Income (loss) before income taxes and equity earnings of affiliates

 

$

184,214

 

 

$

(242,991

)

 

(1)
Equity-based compensation represents non-cash compensation expense for various awards issued under the TKO 2023 Incentive Award Plan, awards assumed in connection with the acquisition of WWE in September 2023, and awards issued under Endeavor Group Holdings, Inc.’s 2021 Plan. For the three months ended March 31, 2025 and March 31, 2024, equity-based compensation includes $1.0 million and $9.0 million, respectively, of expense associated with certain services provided by an independent contractor in the WWE segment. For the three months ended March 31, 2024, equity-based compensation includes $2.4 million of expense associated with accelerated vesting of the Replacement Awards related to the workforce reduction of certain employees in the WWE segment and Corporate and Other.
(2)
Includes certain costs of professional advisors related to strategic transactions, primarily the Endeavor Asset Acquisition.
(3)
Includes costs related to certain litigation matters including antitrust lawsuits for UFC and WWE and matters where Mr. McMahon has agreed to make future payments to certain counterparties personally. For the three months ended March 31, 2024, these costs include the preliminary legal settlement of the UFC antitrust lawsuit for $335.0 million, as described in Note 16, Commitments and Contingencies.
(4)
Includes costs resulting from the Company’s cost reduction program as described in Note 15, Restructuring Charges.
(5)
Primarily relates to losses of $6.5 million on the sale of certain equity method investments and losses on foreign exchange transactions, partially offset by a gain of $1.3 million on the sale of PBR's former headquarters during the three months ended March 31, 2025. Primarily relates to losses on foreign exchange transactions during the three months ended March 31, 2024.