Endeavor Group Holdings, the diversified media operation run by Ari Emanuel, beat Wall Street expectations on Tuesday after reporting net income of $666.5 million, or earnings of $1.29 per share on a diluted basis, on revenue of $1.43 billion for its second quarter of 2023.
Analysts surveyed by Zacks Investment Research were expecting earnings of 31 cents per share on revenue of $1.42 billion.
Adjusted EBITDA for the quarter came in at $304.9 million. As of June 30, Endeavor’s cash and cash equivalents totaled $1.62 billion and its debt totaled $5.11 billion.
In its Owned Sports Properties segment, which includes the UFC mixed martial-arts franchise, revenue climbed 2.5% year over year to $340.1 million, 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. The segment’s revenue was partially offset by $30 million from Diamond Baseball Holdings included in the prior year; that unit was sold last September. The segment’s adjusted EBITDA rose 11.1% year over year to $179.2 million.
In the Events, Experiences & Rights segment, revenue climbed 4.1% year over year to $591.1 million, driven by new media production deals including with Major League Soccer; a strong Madrid Open tennis tournament; Barrett-Jackson, which was acquired in August 2022; and growth at IMG Academy. Growth was partially offset by the performance of On Location’s music business and Endeavor Streaming. The segment’s adjusted EBITDA declined 17.3% year over year to $76.6 million.
In the Representation segment, revenue rose 6.5% year over year to $381.1 million, primarily attributable to Endeavor’s nonscripted content production business, as well as increases across its 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 for the segment fell 3.7% year over year to $107.1 million.
In the Sports, Data & Technology segment, revenue surged 116.3% year over year to $130.6 million, driven by the inclusion of OpenBet, which was acquired in September 2022, as well as growth at IMG Arena. Adjusted EBITDA for the segment declined 11.7% year over year to $13.7 million due to certain costs at IMG Arena incurred in advance of the sales cycle, the company said.
The latest quarterly results comes as Endeavor plans to close the UFC-WWE merger in mid-to-late September.
Upon the deal’s close, the two companies will form a $21.4 billion entertainment giant known as TKO Group Holdings. The deal values UFC at $12.1 billion and WWE at $9.3 billion. Under the terms of the transaction, existing WWE shareholders will roll all existing equity into the new parent company, which the parties intend to list on the New York Stock Exchange under the ticker symbol TKO. Endeavor will hold a 51% controlling interest in the new company, while existing WWE shareholders will hold a 49% interest.
During the quarter, Endeavor completed its $1.25 billion sale of IMG Academy, allowing the company to launch a share repurchase program of up to $300 million in Class A common stock in the third quarter. Endeavor also expects to begin making quarterly cash dividend payments at the end of the third quarter.
