A string of sold out UFC events gave TKO a powerful boost in the third quarter, lifting the mixed martial arts league's parent company to fresh highs in both revenue and adjusted earnings.
UFC posted double digit gains across all of its major categories. Revenue surged 60% from a year earlier to $519.2 million, a jump fueled largely by an additional $132.3 million in media rights, production and content income. Live events and hospitality brought in $36 million more than the prior year period, while partnerships and marketing revenue grew by $20.5 million and consumer products licensing and other revenue added $5.2 million.
WWE faced a more difficult comparison, in part because its main roster staged three more events in the same quarter a year ago. Even so, TKO raised its full year forecast covering UFC, WWE and IMG, the latter of which includes the On Location premium events business. On Location also delivered a strong quarter, helped by a wave of major events tied to the World Cup.
Mark Shapiro, TKO's president and chief operating officer, framed the results as part of a broader shift in the entertainment landscape. "Our third quarter performance reflects the secular tail winds powering live events and experiences around the world, and TKO's assets sit front and center of that premium ecosystem," he said.
Shapiro also pointed to the upgraded outlook as a sign of management's confidence. "As we close out what we've called our year of execution, our decision to raise full-year guidance for the second time this year is the clearest expression of our conviction across the entire portfolio," he said. He added that the business is durable with solid fundamentals, noting that the vast majority of existing revenues are locked in for the next five to seven years.
"Macro trends are firmly in our favor, every facet of sports consumption is pointing north, and we see substantial runway ahead," Shapiro said.
For the quarter as a whole, TKO generated total revenue of $1.36 billion, a 21% increase from the prior year. Adjusted earnings before interest, taxes, depreciation and amortization jumped 54% to $555.7 million, driven by a $119.7 million increase at UFC and a $9.4 million gain at WWE.
Profitability improved alongside the top line growth. TKO's adjusted EBITDA margin widened to 41%, compared with 32% in the year ago quarter.
On the strength of those trends, the company lifted its full year targets. TKO now expects revenue of $5.790 billion to $5.830 billion and adjusted EBITDA of $2.295 billion to $2.315 billion for the year.
