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Date
Wednesday, Nov. 5, 2025 at 5 p.m. ET
Call participants
Executive Chair and Chief Executive Officer — Ariel Zev Emanuel
President and Chief Operating Officer — Mark S. Shapiro
Chief Financial Officer — Andrew M. Schleimer
Chief Legal Officer — Lawrence Epstein
President, WWE — Nick Khan
SVP, Investor Relations — Seth Zaslow
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Takeaways
Revenue -- $1.12 billion in revenue for Q3 2025, reflecting a 27% decrease on a reported basis, primarily driven by the absence of On Location revenue from the 2024 Paris Olympics.
Adjusted EBITDA -- Adjusted EBITDA was $360 million, representing a 59% increase on a reported basis compared to the prior year period, with adjusted EBITDA margin rising to 32% from 15% in the prior year period.
UFC segment revenue -- $325 million in revenue for UFC in Q3 2025, down 8% compared to the prior year period, due to one fewer numbered event and timing/mix effects.
UFC segment adjusted EBITDA -- $166 million in adjusted EBITDA for UFC in Q3 2025, a 15% decline compared to the prior year period, with adjusted EBITDA margin at 51% versus 55% in the prior year period.
WWE segment revenue -- $402 million in revenue for the WWE segment in Q3 2025, up 23% compared to the prior year period, attributed to increased live event nights, ticket sales, site fees, and new event launches.
WWE segment adjusted EBITDA -- Adjusted EBITDA was $208 million, up 19% compared to the prior year period, with adjusted EBITDA margin decreasing to 52% from 54%, largely attributable to strategic investments in talent.
IMG segment revenue -- $337 million in revenue for the IMG segment in Q3 2025, a 59% decrease compared to the prior year period, reflecting the lack of Olympics revenue; offset by uplift from studio projects such as the Ryder Cup.
IMG segment adjusted EBITDA -- Adjusted EBITDA was $61 million, an improvement of $116 million from the prior year period, with adjusted EBITDA margin at 18% compared to negative 7% in the prior year period.
Corporate and other revenue -- $63 million in revenue for Corporate and Other in Q3 2025, a 17% increase compared to the prior year period, primarily from boxing management fees and promotional activity associated with the Canelo versus Crawford event.
Free cash flow -- $399 million in free cash flow generated in Q3 2025, with 111% free cash flow conversion of adjusted EBITDA, aided by the timing of boxing event cash receipts.
Media rights agreements -- UFC secured a seven-year, $7.7 billion deal with Paramount starting in 2026, doubling the average annual value of its prior U.S. agreement.
WWE media partnership -- WWE executed a five-year premium live events deal with ESPN, starting early with WrestlePalooza, and delivering more than 1.8 times value uplift versus the prior deal.
Stock buyback and dividend -- Launched a $1 billion buyback, with $800 million repurchased via an accelerated program, plus a 1% dividend increase paid in September, totaling approximately $150 million for the quarterly cash dividend paid on September 30.
Zufa Boxing JV and events -- Joint venture officially launches in 2026; management reported a landmark Paramount rights deal for Zufa Boxing in the U.S., Canada, and Latin America, and outlined $10 million service fees for each super fight in 2026, targeting two to four annually.
Full-year guidance raised -- Management increased full-year 2025 revenue guidance to $4.69-$4.72 billion and adjusted EBITDA to $1.57-$1.58 billion, primarily from UFC and WWE outperformance and early WWE-ESPN deal timing.
Summary
TKO Group Holdings (TKO 0.06%) reported a sharp contraction in total revenue on a reported basis for Q3 2025, principally due to the exclusion of loss-generating Olympics-related On Location business, which also drove a substantial increase in both adjusted EBITDA and margins. Management emphasized the long-term visibility from newly signed UFC and WWE media rights agreements, highlighting multi-year high-margin, escalator-driven revenue streams commencing in 2026. The company highlighted record attendance and revenue at key UFC and WWE events, launch of the Zufa Boxing joint venture with a key media rights agreement, and step-up in global partnership revenue targets. Shareholder returns advanced through a substantial buyback and increased dividend, funded via operating cash flow and a $1 billion term loan add-on.
Management described the transition to broader distribution through Paramount and ESPN as a lever to boost reach and high-margin partnership revenue, with expectations to achieve $450 million in partnership revenue in 2025, and longer-term company-wide targets of $1 billion by 2030.
Mark S. Shapiro said, "busy on the execution story and boxing. But if something else comes to market, that has scale, reach, significant demand, and we see as having upside opportunity, we will jump into an exploration of that."
The company is building out a dedicated team for site fee negotiations, with more open calendar flexibility expected to accelerate site fee and municipal incentive growth in 2026.
Lawrence Epstein stated, "there's going to be an increase in fighter pay, there's no doubt about that. But we feel like it's going to be in line with what be consistent with the margins that we've maintained over the last several years."
Industry glossary
PLE (Premium Live Event): Flagship WWE events broadcast directly to audiences as scheduled, high-profile productions driving ticket, sponsorship, and media rights revenue.
ASR (Accelerated Share Repurchase): A stock buyback arrangement in which a company repurchases shares rapidly, often from a financial intermediary, using an upfront payment in exchange for immediate share delivery and eventual price averaging.
Site fees: Monetary or in-kind incentives paid by host cities, municipalities, or venues to secure major live sporting or entertainment events.
Equity method investment: An accounting method in which a company recognizes its share of earnings or losses from joint ventures or affiliates, rather than reporting consolidated results.
Free cash flow conversion: The ratio of free cash flow to a company's adjusted EBITDA, indicating efficiency in turning operating profit into cash.
Full Conference Call Transcript
Seth Zaslow: Good afternoon. And welcome to TKO Group Holdings, Inc.'s third quarter 2025 earnings call. A short while ago, we issued a press release, which you can view on our Investor Relations website. A recording of this call will also be available via our website for at least thirty days. After prepared remarks from Ariel Zev Emanuel, TKO Group Holdings, Inc.'s Executive Chair and Chief Executive Officer, and Andrew M. Schleimer, TKO Group Holdings, Inc.'s Chief Financial Officer, we will open the call for questions. Mark S. Shapiro, our President and Chief Operating Officer, and Andrew will be handling the Q&A. The purpose of this call is to provide you with information regarding our third quarter 2025 performance.
I want to remind everyone that the information discussed will include forward-looking statements and/or projections that involve risks, uncertainties, and assumptions. Please see our filings with the Securities and Exchange Commission for further detail. If these risks or uncertainties were to materialize, or any assumptions prove incorrect, our results may differ materially from those expressed or implied on this call. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new information or future events except as legally required. Our commentary today will also include non-GAAP financial measures, which we believe provide an additional tool for investors to use in evaluating ongoing operating results and trends.
These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP metrics can be found in our press release issued today as well as the information posted on our IR website. With that, I'll now turn the call over to Ariel Zev Emanuel.
Ariel Zev Emanuel: Thanks, Seth. Q3 was a milestone quarter for TKO Group Holdings, Inc. Securing landmark media rights deals, doubling our quarterly cash dividend, and launching a $1 billion stock buyback. These achievements, paired with strong quarterly results and the increased full-year guidance we announced today, underscore our continued momentum in the business. Our fundamentals are strong, premium sports content and experiences are in high demand, and as such, the table is set for long-term sustainable growth. Our historic media rights agreements were the standout this quarter, locking in recurring revenues and creating new monetization opportunities for our biggest brands.
UFC's seven-year $7.7 billion agreement with Paramount to bring UFC to Paramount Plus and CBS in the U.S. places us squarely in the sports mainstream and doubles the AAV of our previous agreement. Starting in 2026, UFC will join the NFL, the Masters, March Madness, UEFA in Paramount's sports portfolio, expanding our reach and removing barriers to entry for fans, ultimately worldwide. WWE's five-year premium live events partnership with ESPN in the U.S. launched ahead of schedule in Q3 with the first-ever Wrestle Palooza, a new franchise streamed exclusively on ESPN's new direct-to-consumer service.
This deal delivers a greater than 1.8 times step up in value and brings WWE's marquee events, including WrestleMania and SummerSlam, into ESPN's unrivaled promotional ecosystem, further expanding WWE's footprint and fan base. Our Zufa Boxing joint venture will officially launch in 2026. And with it, we announced a significant media rights agreement with Paramount in the U.S., Canada, and Latin America. We ramped up our competitive position in boxing by promoting the Canelo versus Crawford fight in September, which sold out Allegiant Stadium in Las Vegas and drew more than 41 million viewers worldwide on Netflix. Those super fights will serve as significant marketing stages for Boxing going forward.
In addition to closing these major media rights deals, our sports properties, which collectively reach more than a billion fans globally, created strong momentum for our live events and brand partnership segments, setting new records and adding first-ever partners. As a few examples, UFC 319 became the highest-grossing event at Chicago's United Center, and UFC's highly anticipated return to Mainland China sold out Shanghai's indoor stadium in less than a minute. Similarly, WWE's live event set 35 individual market records throughout the quarter, and the first-ever two-night SummerSlam sold more than 100,000 tickets at MetLife Stadium. Building on these arena records, our live events continue to attract strong interest from cities and venues worldwide.
This quarter, UFC and WWE expanded their relationships with T-Mobile Arena in Las Vegas and Delta Center in Salt Lake City. We also announced a four-year UFC partnership with Galaxy Macau and a WWE agreement with the General Entertainment Authority to bring WrestleMania 43 to Riyadh in 2027. WWE content also continues to generate impressive ratings for our media partners. SmackDown led prime time cable ratings nine Fridays in the quarter, and Raw maintained its position on Netflix's global top 10 every single week through the quarter, extending a streak that began with the launch in January.
Global Brand Partnerships achieved impressive results, with WWE's robust double-digit growth in the quarter powered by SummerSlam and new blue-chip brands, including Maybelline, WWE's first-ever official cosmetics partner. And at PBR, fan engagement continued to grow. In October, a single Sunday broadcast drew an average of 2.7 million viewers on CBS, the league's largest audience since joining the network in 2012, outperforming MLB playoffs and college football ratings that day. With this momentum, and building on its longstanding partnership with CBS, PBR earlier today announced a five-year deal to bring its Unleashed the Beast series to Paramount Plus beginning in 2026.
Ariel Zev Emanuel: Finally, IMG and On Location also demonstrated momentum in the quarter. IMG, in addition to advising on TKO Group Holdings, Inc.'s landmark media rights deals, played a pivotal role in driving global broadcast coverage for top sporting events, including Wimbledon, the U.S. Open Tennis Championships, The Open At Royal Portrush, and the Ryder Cup. And On Location continued to capitalize on robust demand for premium experiences, selling out packages to 20,000 fans at the Ryder Cup and hosting 47,000 attendees in Dublin for the Aer Lingus Classic. Across the board, we're firing on all cylinders, but we know we're still in very early innings.
With our cornerstone media rights agreement secured, we are squarely focused on preparing for UFC's Paramount debut, maximizing WWE's presence on ESPN, driving growth across live events and site fees, strengthening our global partnerships, and launching Zufa Boxing. Our priorities are clear as we finish the year and position the business for 2026. Sustained strong performance across all our businesses, capitalize on new growth opportunities, and maximize shareholder value. With that, I'll turn the call over to Andrew.
Andrew M. Schleimer: Good afternoon. As Ariel highlighted, we delivered solid operating and financial results in the quarter and for the third quarter in a row have raised our expectations for performance for the full year. We've completed our most significant media rights agreements with great outcomes that provide visibility into a multi-year high-margin contractual revenue stream with annual escalators. Over the term, these deals will drive meaningful margin expansion and significant free cash flow generation. We remain laser-focused on operational execution. UFC and WWE remain our core drivers, and we're continuing to see significant strength at these brands.
We're also making meaningful progress integrating IMG, On Location, and PBR into TKO Group Holdings, Inc. and realizing cost synergies and revenue opportunities from these businesses that are even greater than our recently raised expectations. Now turning to our consolidated financial results for the third quarter. We generated revenue of $1.12 billion, adjusted EBITDA was $360 million. Our adjusted EBITDA margin was 32%. As expected, our year-over-year results were impacted by the 2024 Paris Olympics, which was a key driver of the decrease in revenue as well as the increase in adjusted EBITDA and adjusted EBITDA margin as the event was loss-making.
On a reported basis, revenue decreased 27%, adjusted EBITDA increased 59%, and adjusted EBITDA margin increased from 15% in the prior year period. Turning to our UFC segment. As we articulated on our Q2 call, while the underlying trends remain extremely strong, the timing and mix of the calendar meaningfully impacted results in the quarter. UFC had 10 total events in the third quarter of this year, which was comparable with the prior year period. However, in the current period, we held two numbered events compared to three in the prior period, including a seminal event, UFC 306 at Sphere in Las Vegas. UFC generated revenue of $325 million, a decrease of 8%.
Adjusted EBITDA was $166 million, a decrease of 15%. UFC's adjusted EBITDA margin was 51%, down from 55% in the prior year period, largely attributable to holding one less numbered event. Media rights production and content revenue decreased 7% to $201 million. The decrease was driven by one less numbered event, partially offset by the contractual escalation of 15% to $44 million. Strong underlying trends in pricing and attendance were more than offset by one fewer numbered event as well as the impact of UFC 306, which remains the highest-grossing event in UFC history. Partnerships and marketing revenue decreased 4% to $71 million.
Tailwinds from new and renewed partnerships were more than offset by the mix of events in the quarter, most notably UFC 306, which featured our first-ever title partner sponsor, Riyadh Season. We continue to make significant progress in partnerships, adding new categories and growing existing ones, including recently announced deals with Wingstop, Prime Video, and Sony Pictures, among others. Adjusted EBITDA reflected the decrease in revenue as expenses were essentially flat. Direct operating expenses decreased due to lower production, marketing, and other event-related costs, primarily due to the mix of event venues, cards, and territories, most notably UFC 306, which had significantly higher than normal production costs.
SG&A increased primarily due to higher personnel and travel costs compared to the prior year period. Our WWE segment generated revenue of $402 million, an increase of 23%. Adjusted EBITDA was $208 million, an increase of 19%. Adjusted EBITDA margin was 52%, down from 54% in the prior year period, largely attributable to strategic investments in talent associated with the launch of new properties such as WrestlePalooza. Performance was favorably impacted by the timing and mix of the event calendar. Most notably, WWE had five nights of main roster premium live event programming in the third quarter, compared to three nights in the prior year period.
The increase related to the expansion of SummerSlam, which was held at MetLife Stadium, to a two-night event, and the introduction of WrestlePalooza, which marked the launch of WWE on the ESPN platform. Live Events and Hospitality revenue increased 61% to $83 million. The increase was driven by higher ticket sales revenue, reflecting an increase in average ticket price and total attendance, and an increase in site fee revenue. SummerSlam, which included a meaningful site fee, was a notable contributor to the increase. Media rights production and content revenue increased 9% to $249 million.
The increase was driven by the additional PLE programming, a second night of SummerSlam and WrestlePalooza, as well as a contractual escalation of media rights fees, including our long-term global agreement with Netflix. These items more than offset the unfavorable impact of one less episode in the quarter and the previously discussed shift to SmackDown to a two-hour format for the second half of the year. Partnerships and marketing revenue increased 84% to $40 million, driven by new partnerships and renewals across multiple categories, including travel, financial services, food and beverage, telecommunications, and beauty, among others. SummerSlam, which was the highest-grossing non-WrestleMania PLE in WWE history, drove much of the quarterly increase.
The event featured JPMorgan Chase, which partnered with WWE for the first time as a presenting sponsor. WWE partnership revenue at SummerSlam and overall growth in Q3 illustrated the blue-chip sponsors and new categories we are unlocking to deliver revenue. We believe there's plenty of runway to continue growing this important part of the business. Adjusted EBITDA reflected the increase in revenue, partially offset by an increase in expenses. Direct operating expenses increased due to higher talent, production, marketing, and other event-related costs, primarily due to the mix of events, most notably SummerSlam and WrestlePalooza. SG&A increased primarily due to higher travel costs compared to the prior year period.
Our IMG segment generated revenue of $337 million, a decrease of 59%. Adjusted EBITDA was $61 million, an increase of $116 million. Adjusted EBITDA margin was 18%, up from negative 7% in the prior year period. The decline in revenue primarily related to the absence of revenue at On Location from the 2024 Paris Olympics. This decline was partially offset by an increase in revenue at the IMG business from new business in our Studios Group, primarily Ryder Cup and the Esports World Cup in Saudi Arabia. Adjusted EBITDA reflected the decrease in revenue, partially offset by a decrease in expenses.
The decrease in direct operating expenses principally reflected the absence of costs at On Location for the 2024 Paris Olympics, which was a loss-making event. SG&A decreased primarily due to lower Olympics-related costs at On Location, as well as the impact of cost reduction initiatives in connection with the acquisition of IMG and On Location. Corporate and Other generated revenue of $63 million, an increase of 17%. Adjusted EBITDA was negative $75 million, an improvement from negative $90 million in the prior year period.
The increase in revenue was primarily driven by promotional and management fees from our boxing initiatives, ZUFA Boxing, which JV we announced earlier in the year, as well as the Canelo versus Crawford Super Fight that took place in September at Allegiant Stadium in Las Vegas. The improvement in adjusted EBITDA was primarily due to the increase in revenue and a $33 million decrease in costs related to corporate allocations of Endeavor corporate expenses under their ownership of IMG, On Location, and PBR. As we disclosed on prior calls, from the close of the acquisition on February 28 forward, there are no Endeavor corporate expense allocations.
As per boxing, in September, we promoted our first super fight, Canelo Alvarez versus Terence Crawford, which was a massive success. As Ariel noted, the event, which was held in front of a sold-out crowd of over 70,000, generated a gate of over $47 million, the third largest in boxing history, and garnered over 41 million viewers on Netflix. Separately, we continue to operationalize our JV in preparation for our first event in January 2026. At the end of the quarter, we announced the pivotal milestone, a long-term media rights agreement with Paramount to become the exclusive home of Zufa Boxing throughout The United States, Canada, and Latin America. Now moving on to our capital structure.
In the third quarter, we generated $399 million free cash flow. Our free cash flow conversion of adjusted EBITDA was 111%. Free cash flow was positively impacted by the timing of cash receipts and payments related to the Canelo versus Crawford boxing event. During the third quarter, we collected a meaningful amount of cash on behalf of our partner Sella. In the fourth quarter, we plan to transfer substantially all of these proceeds to Sella and therefore expect an offsetting impact in our results. Free cash flow in the third quarter also included the unfavorable impact of approximately $12 million of net payments related to On Location for the 2026 FIFA World Cup.
In early September, we announced a 1% increase in our quarterly cash dividend program. On September 30, we made our first payment under the upsized program from TKO Group Holdings, Inc. of approximately $150 million. We intend to fund quarterly cash dividends with cash flow from operations or cash on hand. Regarding our previously announced share repurchase program, in September, we entered into an ASR agreement to repurchase $800 million of our Class A common stock. We received an initial delivery of approximately 3.2 million shares and expect to complete the agreement in early December. We also repurchased approximately $26 million of shares under a privately negotiated transaction.
Lastly, we entered into a 10b5-1 trading plan for the repurchase of up to $174 million of Class A common stock. Repurchases contemplated under the 10b5-1 plan will commence immediately once the ASR agreement is completed. These repurchases are being funded with proceeds from the $1 billion term loan add-on that we closed in mid-September. We ended the quarter with $3.759 billion in debt and $861 million in cash and cash equivalents, in addition to $312 million of restricted cash. Now turning to our outlook. As we've discussed in the past, we manage the business with a focus on full-year performance.
Therefore, we believe results are best evaluated on a full-year basis given the quarterly fluctuations that are inherent in our operations. As noted in our press release, we are raising our full-year 2025 guidance for revenue and adjusted EBITDA for the third quarter in a row. We are now targeting revenue of $4.69 to $4.72 billion and adjusted EBITDA of $1.57 to $1.58 billion, an increase of $45 million and $25 million respectively, at the midpoint of the ranges as compared to the prior guidance we issued in August.
The increase is related primarily to strong operating performance at UFC and WWE through the first nine months of the year, as well as our anticipated performance for the remainder of the year. It also reflects the accelerated timing of the WWE PLE deal with ESPN, net of costs associated with terminating the NBCU deal early. In terms of free cash flow, while we have not given formal guidance, we are targeting a full-year 2025 free cash flow conversion rate in excess of 60%. As we've discussed on prior calls, this excludes the impact of approximately $300 million of non-recurring amounts, as well as the net benefit of restricted cash related to the 2026 FIFA World Cup.
On our last call, we highlighted a few notable items that we expected to occur in the third quarter, and our results were consistent with all of them. As we look to 2025, we want to highlight the following. At UFC, results are expected to be positively impacted as the current calendar for the fourth quarter is expected to include 11 events, compared to 10 in the prior year period. Within these 11, we expect four numbered events, which is comparable to the prior year. However, we intend to stage nine events with live audiences, compared to seven in 2024. At WWE, as we previously discussed, the results will reflect the favorable impact of the Raw Domestic Rights deal.
As a reminder, the fourth quarter of this year will reflect the new long-term agreement with Netflix compared to the short-term agreement we reached with USA in the prior year. The fourth quarter will also benefit from the new domestic rights agreement with ESPN. However, the timing of the calendar is expected to significantly offset the benefit of these items. WWE is planning to have two nights of main roster PLE programming in the fourth quarter, compared to three nights in the prior year. Most notably, as we announced earlier in the year, one PLE in Saudi Arabia is shifting from Q4 2025 to 2026.
All of these items taken together, along with continued underlying momentum in the business, are expected to yield strong financial performance in Q4. At the IMG segment, we expect fourth-quarter revenue and adjusted EBITDA to be down modestly year-over-year in terms of absolute dollars, primarily due to the absence at IMG of the Gulf Cup, which as a reminder is a biennial event, as well as an increase in cost at On Location related to preparations for the upcoming Games. In closing, while we're not providing formal guidance for 2026 on this call, we would be remiss if we didn't highlight some things we're excited about looking ahead. Number one, media rights.
Our 2026 financials will include the significant step-up in connection with the commencement in January of the seven-year UFC rights deal with Paramount, as well as a full year of media rights fees from our new five-year agreement with ESPN for the WWE PLEs. This high-margin contractual revenue stream with annual escalators will provide attractive visibility and stability for our businesses for years to come. Number two, site fees. We continue to see meaningful momentum in securing significant financial incentives and delivering measurable economic impact by bringing our events to cities both in The United States and around the globe.
We're focused on a multipronged strategy that's predicated on receiving higher value from markets we currently have incentive packages with, site fees from markets we've been to but don't currently receive a fee from, as well as site fees from new markets. Additionally, in 2026, the current WWE calendar includes three PLEs in Saudi Arabia, compared to one in 2025. Number three, global partnerships. We continue to make significant progress in this area of our business, adding new partners and categories while also growing existing partnerships. Our recently announced media rights deals, including commercial inventory, will further bolster this area of our business.
In 2025, at UFC and WWE, we expect to achieve $450 million in high-margin partnership revenue and continue to work towards achieving our previously communicated target of $1 billion in total company partnership revenue by around 2030. Number four, Boxing. Which we believe represents an additional opportunity to drive value for shareholders in multiple ways. The initiative is anchored by our JV Zufa Boxing, which we anticipate will launch in January. For the avoidance of doubt, the financials for ZUFA Boxing are not consolidated. We have an equity interest in the joint venture and therefore we account for it as an equity method investment. Also within our reported results are management fees for services to the JV.
Our consolidated results in 2026 are expected to include a full year of management fees as opposed to the partial year that we recorded in 2025. Over time, as Zufa Boxing scales, our meaningful ownership interest will enhance the value to and in order to the benefit of TKO Group Holdings, Inc. shareholders. Separate from the JV, we expect to work with our partner Sella to host two to four SuperBytes per year. As with the recent Canelo versus Crawford event, TKO Group Holdings, Inc. will receive additional promotional and management services fees as well as a commission for negotiating the media rights deals related to these events.
In addition to these four items, we continue to focus on the integration of IMG, On Location, and PBR, as well as realizing revenue and cost efficiencies across all of our businesses, which we expect will be incremental to our already attractive margin profile. With that, I'll turn it back to Seth.
Seth Zaslow: Thanks, Andrew. Operator, we're ready to open the call for questions.
Operator: First question is from the line of Stephen Neild Laszczyk with Goldman Sachs. Your line is now open.
Stephen Neild Laszczyk: Hey, great. Thanks for taking the questions. Maybe starting off first with UFC and media rights picture coming a bit more into focus. You have The U.S., The LatAm, and Australia, I think, locked in. I just be first curious, Mark, if you could maybe discuss why you thought Paramount was the right partner on the LATAM and Australian side of the international equation. And then as you look out across the rest of the international portfolio, perhaps what you're thinking about and discussing and prioritizing in terms of partners and maybe why Paramount wasn't included more holistically on the international side and where that opportunity lies. At the moment looking forward? And then a question on WWE after.
Mark S. Shapiro: Great. Thanks, Stephen. Good to hear from you. Look, we're I think just back up a step. We're viewing TKO Group Holdings, Inc. right now really as an execution story. Our primary focus is really continuing the momentum we're seeing in the business, which is continued operational expansion, integration, and of course, as you know, we're laser-focused on capital return. On the media rights side, look, we're in a real good place domestically. Obviously, revenue, annual escalators that are strong at. There's a high-margin revenue stream with high visibility, which will be good for investors. And then on the international front, we're really focused on increasing our monetization opportunities there.
Remember, a majority of our fan base, especially with UFC, is international. So we really need to close the gap on our fan base, make it a priority with regard to maximizing media rights opportunities. Of course, partnerships will end up benefiting if we do that. And as we're successful country to country and maybe starting to have multiple cities having events, especially with WWE. In a country at the same time as we move around. That will be a real opportunity for us in terms of audience growth. And all this will, I think, improve our attractive margin profile that we currently sit with.
We expect to see margin expansion through high-margin revenue growth as well as continued cost discipline as we go into 2026. And when we sat back and looked at these specific territories that you referenced, it's really it's a matter of negotiations really with various bidders. And we were fortunate to have three separate bidders at the table when it came to those specific regions. Because remember, what's important to one is not necessarily important to another. At the end of the day, as it turned out with the domestic deal, Paramount and CBS for that matter, but overall, that company, PSky, ended up having the best equation.
Which is best for our brand, best marketing plan, a holistic effort given what they're doing on the domestic side with that investment. And of course, the best right fee. So for us, it's always going to be brand reach dollars. And for those three territories specifically, we knew we were going to have a nice bidding war, because it was attractive and it has strong fan bases and we capitalized on it. And frankly, nobody here has taken a victory lap, not on those specific territories in that deal. Or really even on the quarterly earnings here. I mean, we're proud of where we are. We're proud of the road ahead. We're cautiously optimistic.
We're encouraged by each of the revenue drivers. But we know we have a lot of work to do. We're going to continue to really beat and raise. As a continual thing.
Stephen Neild Laszczyk: That's great. Thanks for that. And then maybe one on WWE for Nick if he's on. Super curious, WWE live events revenue continues to rerate meaningfully higher here. Just would love your take on the story that's playing out in that part of the business. Is this mostly PLE story at the moment, or are the weekly events starting to contribute as well and pricing versus capacity, we just love your take on where you think that could go as you look into 2026 and you rewrite off this higher base here?
Nick Khan: So thanks for the question. It's both. Capacity continues to be very high. We've increased prices appropriately with the marketplace. That's for the PLEs, Raw, SmackDown, Saturday Night's Main Event, and every other ticketed program WWE has. We remain bullish on it. A couple of years ago when TKO Group Holdings, Inc. was stood up, one of the first things we collectively did was reduce the non-televised live events, which created more scarcity in the marketplace for our televised events, and our continued international expansion only furthered that. So even in January, you'll see us on a European tour for Raw and SmackDown. Leading into Royal Rumble, which takes place in Saudi Arabia.
Tickets are already on fire for that event and, again, creates more scarcity in The United States. Which is a good thing in terms of our overall gates. Thank you.
Operator: Thank you for your question. Next question is from the line of Brandon A Ross with LightShed Partners. Your line is now open.
Brandon A Ross: Hi, thanks for taking the questions, guys. Just a quick follow-up on Stephen's first question. You talked about brand and reach in dollars. Kind of being what you're aiming for. Just focusing on the reach side of that, can you just talk about what the distribution model with Paramount is going to look like in the wake of this deal and what you expect going forward with other territories? Or should we expect the pay-per-view model that, I guess, has now been replaced domestically and really at WWE, to still have residents, or do you expect that to kind of go away internationally as well? And then I have a follow-up.
Mark S. Shapiro: Yeah, Brandon. Thanks for the question. There were very few markets where we actually, at UFC, did transactional pay-per-view and have deals to sell on a transactional basis. So legacy, we are still looking at Australia and Canada were the two big markets. And as part of the deal, Paramount that excluded in Australia, the pay-per-view or numbered event main cards, which still sit with the zone Foxtel. But those are really the two major markets where we're selling on a transactional basis. So you can expect like we historically have done is selling forty-two nights of content to distributors and the ultimate distribution decision is based upon their go-to-market strategy in the case of Paramount.
Based to your subscription all you can eat for all of our content.
Brandon A Ross: Okay. Got it. Thanks for the clarification. And then, with the UFC domestic deal done, just wanted to get a better understanding of exactly what the incremental flow through is in terms of margin percentage? I know it's high, but any more color? Should we how should we expect the fighters to be compensated? Is the fighter pay going to go up? And what is exactly the framework now for fighter pay? I know, like, going back in time, the North Star used to first certify choose to be points and pay-per-views, and the business has changed quite a bit. So any color you could give around that would be great.
Andrew M. Schleimer: Yes. So Brandon, I'll take the first part and then Lawrence Epstein, who's here with us, will take the fighter compensation and the structure around that going forward. But at this point, we're not going to give specific guidance around the flow through other than the fact and consistent with past commentary is that it will be meaningfully margin accretive to the UFC business. And you've seen the last couple of quarters, Q2, they operated at 59% operating margins. Q3 51% operating margins for the variety of factors that we laid out on the call. But we do believe that there's going to be meaningful accretion to our operating margins going forward.
Lawrence Epstein: Brad, this is Lawrence Epstein. On the Fighter Pay question, there's going to be some changes to the structure of our deals in particular with some of our premium athletes that had a percentage of their compensation based upon pay-per-view sales. But that being said, our team is already in the process of working out those deals. And as Dana White said, there's going to be an increase in fighter pay, there's no doubt about that. But we feel like it's going to be in line with what be consistent with the margins that we've maintained over the last several years.
Brandon A Ross: Got it. Thank you.
Operator: Thank you for your question. Next question is from the line of Ben Swinburne with Morgan Stanley. Your line is now open.
Ben Swinburne: Thanks. Good afternoon. Wanted to ask you guys about boxing. Is the Canelo Crawford fight, I mean, this was a massive hit. And I think it was open my eyes to the possibilities here. You guys have these sort of JV structure, fee structure. I'm just wondering if there are thoughts or opportunities or maybe that ship to sale of doing more in boxing kind of wholly owned as a promoter. You certainly have you have Dana White. You have a strong balance sheet, lots of cash flow, equity currency. Is are there things you're looking at on the boxing front?
Maybe to go even bigger than some of the initial investments that you're making in as you sort of get ready for what you're launching in 2026 with ZUFA?
Mark S. Shapiro: Yeah. I would just say Ben that ultimately, I think these super fights are going to be a huge catalyst for us. Right? And we've, you know, we I wouldn't say we downplayed the first one, but it was obviously the first one we didn't really know what to expect. And we didn't anticipate necessarily pouring a lot of fuel over that. We're more focused on the Zufa Boxing League, if you will. At the end of the day, as we've told you, mean, we expect to receive a services fee of $10 million each of the fights. And we expect to do two to four fights per year. I think you can expect that in 2026.
And frankly, we want to do them. Because we can populate the undercards some of the time, if not most of the time, with Zufa fighters. Which will help us build name personalities, followings, rivalries, and just really shed more of a spotlight onto our Zufa Boxing League. I think the opportunity beyond that lies in each of those fights 10 million was just a starter. And, you know, Nick is obviously hands-on involved with the negotiations with our partners in Saudi Arabia. And then putting these cards together, putting these featured matches, these main cards together, and then ultimately, how can we bring them value and as such take a commission from it.
And remember, is all outside of our JV. So really beyond the fee they pay us, to co-promote or promote, there's the media deals and getting paid on doing those deals. There's partnership deals and getting paid on doing those deals. There's ticket sales. And then there's also just serving as their marketing agency on the ticket sales. So while we're not necessarily laying out a financial model for you all, for you right now. We're laying out a strategic model of ways that we can bring in incremental high-margin dollars. So, we're frankly, we have a big appetite for this. Having said that, Nick got a full-time job. WWE. We're not taking our eye off the ball there.
Or taking anything for granted. Especially with the success we're having this year that just compounds the pressure to beat that next year. And Dana White definitely has a lot on his plate and therefore isn't going to be out there working as a promoter for one-off boxing fights on a regular basis. He could do a few of these, annually but really no more than that.
Ben Swinburne: Yeah. And just as a follow-up, Mark, I mean, you hit earlier, I think in your prepared remarks and then I think in the Q&A about TKO Group Holdings, Inc. as an execution story right now and you're focused on executing. You look at UFC, what you guys have done with that asset kind of speaks for itself. The last decade. WWE, the numbers are way ahead of the deal model. At least that was filed. So it sort of begs the question, like, why not go out elephant hunting for more? And maybe the answer is there aren't opportunities, there are scarce assets. That's why there's a long list of them. Maybe the answer is management bandwidth.
You guys need to clone yourselves. But I guess the question is why not be looking for the next thing just given how well WWE has gone, UFC has gone and clearly the muscle you guys have built up here?
Mark S. Shapiro: Yes. And our financial profile, I mean, we certainly we certainly have the ammo to do that. Look. Bottom line is we are. I wanna make it clear. No nobody here is resting, sitting back. That's that's that's That's not just in our DNA whatsoever. We are focused on the execution story. We don't want to get distracted. We're not we want certainties. There isn't a lot out there that reaches our level but we're on the hunt. And in the absence of something coming to market, we're going to go full on with boxing. I'm not worried about the team. Everybody does have a day job, as I said, and they're stretched.
I'm not gonna say stretched thin, but they're stretched. But we have a number of relationships. Each of us. Dating back decades here, with high-level individuals. Value creators across the sports spectrum. And we are just waiting to bring people off the bench. But we need we need those opportunities to materialize. And again, in that absence, we go full on with boxing. 12 to 16 fights, on Zufa this year. It's two to four super fights. It's collecting commissions as we bring value to our partners in Saudi Arabia. It's seeing that Zufa Boxing League achieves the same kind of revenue opportunities as our other leagues, We're obviously did that first with our paramount deal that we announced.
They're going to be a terrific partner, but we have global partnerships to do there. We have consumer licensing opportunities to do there. We have ticket sales we're going to be embarking obviously sell, and then beyond that, there's site fees that come into that and that gives us an even stronger hand when you start to complement the opportunities we have with WWE. And UFC and PBR. So we'll be plenty busy on the execution story and boxing. But if something else comes to market, that has scale, reach, significant demand, and we see as having upside opportunity, we will jump into an exploration of that.
Operator: Thank you for your question. Next question is from the line of Peter Lawler Supino with Wolfe Research. Your line is now open.
Peter Lawler Supino: Hi. I wanted to ask a question about site fees. You mentioned them in your prepared remarks as a driver. Of 2026. I think you've in the past provided some color on the number of sites that historically have paid fees and the number that haven't. Wondering if you can just give us any more color about to what extent that can be a significant driver of revenue in 2026 and beyond, anything we can do to think constructively about that? Thank you.
Andrew M. Schleimer: So Peter, I'll look to two ways to answer this. Number one, kind of inorganic timing. 2025 benefit from one Saudi Arabia event. 2026 will benefit from three at the calendar shift. From December into January with the first-ever Royal Rumble in Saudi Arabia in January. So as we think about 2026 specifically, it will be the beneficiary of three large site fees from Saudi Arabia. And then sort of on the organic side, I outlined really three key strategic areas of focus for us. In my prepared remarks. And really, that's where we're seeing a significant amount of momentum.
The TAM, as we've previously outlined, is no longer just sort of our premium, you know, the 2020 premium or so not encumbered by our Middle East events. We're seeing a lot of interest in the Raw's, in the SmackDown's, in our UFC fight nights. And we have a whole host of comps that we've discussed over the last couple of calls. That give us even more of a bullish tone to strike as we think about 2026. So while we're not going to talk about specifics on-site fees save that for our '26 guide. We feel real good going into next year.
Mark S. Shapiro: Just remember Peter, we have a full-time team that does nothing but work on-site fees for the three major sports that are in our portfolio, let alone boxing, which is on the way. And we had a board meeting just earlier this week. We were walking the board through 60 plus different events where we're in conversations ranging from a couple 100,000 in cash and in kind to multimillion. Around the globe. So this is a high-margin revenue opportunity that we are approaching like a heat-seeking missile.
Peter Lawler Supino: How long has that team existed at scale doing what it's doing?
Mark S. Shapiro: Really, the last three months, I would say. Is where we've we made a couple outside hires added in added them to our revenue generation team. If you will, across TKO Group Holdings, Inc., So it's it's really like a six-person roster that is dialing for dollars. I think you've heard us say this also before, Peter. You know, the deeper we've gotten into TKO Group Holdings, Inc., sort of '24 given the formation in '23 was already locked and spoken for. So '25 you know, had some carryover where we had a little bit less flex in terms of dates and locations.
'26 is really one of the first years where we have an open calendar where we can make more strategic decisions and offer up some of these opportunities to municipalities and tourism boards that are willing to pay. And raw is really gained so much momentum. I mean, you I know you follow the viewership. When you're number one in 29 to 30 countries week to week on Netflix, that catches a lot of people's eyes. And that kind of opens the door for these conversations we're having with regional governments, municipalities, cities, etcetera.
Peter Lawler Supino: That's great. Thank you.
Operator: Thank you for your question. Next question is from the line of Ryan Andrew Gravett with UBS. Your line is now open.
Ryan Andrew Gravett: Hey guys. So as you called out, there's you know, a big opportunity for audience growth at the UFC. Next year without the pay-per-view paywall. So I'm wondering how that has impacted your conversations with current and potential new sponsors since the deal was announced. And Andrew, you referenced this in the prepared remarks, but how should we think about the impact of this on partnerships growth in 2026?
Andrew M. Schleimer: Look, I think it's clear that we have a lot of excitement around the table from our sponsors by virtue of this content, the most premium content in our numbered events, being more accessible to a broader fan base than it's been in the past or at least over the last seven years. With ESPN and double paywall. And I just bring you back to when we did the ESPN deal where we actually made a conscious decision to assist in the launch of ESPN D2C with a sort of nascent offering and a two million to three million subscriber base that we assisted in growing to north of 20 million.
And at that time, we actually had, you know, the opposite question. And why should we get more value from our sponsors when reach and frequency and distribution was becoming more narrow. We were able to sell through that. So look, the team is excited, our sponsors are excited, our partners and Paramount are excited. What I'll tell you is a meaningful growth lever over the next three to five years is not only, you know, reach and frequency, but it's the ability to combine the commercial units and commercial inventory that we got in these media rights deals. Hence, why we're getting even more comfortable with that long-term billion-dollar goal.
Mark S. Shapiro: Yeah. Also, Ryan, I mean, don't we don't view all the way May slip and say that now and then, we don't view these brands as sponsors. I mean, these are these are multiple levels and layers and intricacies of partnership opportunities from activation, experiential, branded content as Andrew said, commercial inventory. I mean, these are massive deals that cover a lot of ground as our brand partners attempt to maximize reach and eyeballs for their product or their own brands. This is a home run-in the sense that even to Andrew's point that we matured with ESPN plus and got to a point of having 25 million subs you're now talking about Paramount having 75 million plus global subs.
So from day one, we've got a wider universe and it's actually flipped. It's not our partners coming to us that were saying, should we be paying as much for only 3 million subs like when we launched with ESPN plus. It's us going to them saying, hey, now you're in 75 million plus maybe we should reopen your deal and you should pay more and will it blend and extend? So we're having those opportunities with existing partners in our quest to get to 1 billion. We're having fruitful conversations with new categories and we plan to announce two major deals new deals with new brands by the end of the year.
I'm making sure Seth Zaslow writes that down on his legal pad right now.
Ryan Andrew Gravett: Awesome. Thanks, guys.
Mark S. Shapiro: Thank you. Operator, why don't we take one last question please?
Operator: Final question is from the line of Vikram Kesavabhotla with Baird. Your line is now open.
Vikram Kesavabhotla: Yes. Hey, thank you for taking the question. Want to ask about WWE and I'm curious if you could talk more about your initial reaction to this new relationship with ESPN have these first couple of PLEs performed relative to your expectations and what's standing out to you so far in terms of the potential benefits of that partnership?
Nick Khan: Great. So by the way, we're thrilled with the start of it. So it's obviously a new product. It's a new platform. If you noticed any of the promotion going into our first event with them, WrestlePalooza, which is a new event for us, which we're really pleased with. You saw wall-to-wall coverage on all ESPN platforms so much so that on College Game Day, the morning of Wrestle Palooza, you had the entire panel Pat McAfee, Coach Saban, Kirk Curb Street, Desmond Howard, Reece Davis, all predicting the winner of Brock Lesnar versus John Cena. It was phenomenal. It's going to take time for ESPN to grow that platform. The way that they want to grow it. We're patient.
We'll continue to put on our product the way that we think only we can do. And let's see where we end up.
Mark S. Shapiro: Yes. Vikram, ESPN can be one of the best marketing partners in the media space. When they strategize and get behind something. We've seen that firsthand with the UFC. And to Nick's point, WrestlePalooza was an incredible launch great for our brand, great exposure out there in some of their most prominent shows with some of their most prominent talent promoting our event. We want to sustain that. We need to sustain that. And I think at the same time, it's extremely important to us and we're watching like everybody else to see that as they renew a lot of their distribution partner deals that they get the ability to authenticate for free.
Vikram Kesavabhotla: So
Mark S. Shapiro: know, ESPN d two c, if you're a so and so subscriber, you know, I'm not gonna get into, you know, who has it and who doesn't. Some of these folks can just authenticate they get the D2C partnership for free. So you just carry the app. And others are paying 29.99 And it's their goal of course to redo all their transmission deals and get these consents. And we're anxious to see that happen. YouTube TV is a prime example of that.
Nick Khan: Thanks, everyone. We have a couple of extra minutes. Why don't we take one more question?
Operator: Next question is from the line of Eric Handler with ROTH Capital. Your line is now open.
Eric Handler: Okay. I wasn't sure who I was with there for a second. Wonder if you could talk a little bit more about partnerships and marketing. Specifically, what's been the increase in the number of brands who are now doing sponsorships with both UFC and WWE, and what's been the overall increase in the number of brands? And at this point, is it still a volume game with a lot more brands to be added? Or is there some pricing leverage too?
Andrew M. Schleimer: Thanks, Eric. Look. I think it's both. I mean, most recently, and I articulated this in my prepared remarks, brands like Wingstop are now advertising across both UFC and WWE. It is the most recent, but we've had you know, a handful of you know, cross crossover brands. But again, to your point, it's new brands, it's existing partners spending more its existing and new partners looking at us differently now via the Paramount relationship just given the reach and distribution opportunity of all of our count content for premium content in the numbered events. So this is an area where, you know, we still believe it's early innings.
And our team led by Grant Norris Jones is not gonna rest until they get to that billion-dollar plus overall company goal. So we wouldn't be talking as specifically about numbers if we didn't feel good about them. And we've got our sights set on meaningful growth going into '26.
Mark S. Shapiro: I think it's important to add Eric, we've now reached a point where we're taking a great deal of incoming calls. Right? When we started with the UFC, this was an outbound business. When we first acquired it way back in Endeavor. And now it's it's an incoming significant incoming call not just to check on UFC, but can they wrap a package portfolio of PBR and WWE? And frankly, we think that's how they can maximize reach and engagement. And it really presents a nice opportunity for us.
Eric Handler: Thank you.
Nick Khan: All right. At this point, thank you everyone for joining us on today's call. And operator, you can conclude the call.
Operator: That concludes the conference call. Thank you for your participation. You may now disconnect your lines.