In the quarter that included the marriage of UFC and WWE under the TKO Group umbrella, Endeavor saw its Q3 revenue rise despite headwinds from Hollywood strikes and other market conditions, but operating expenses climbed even more.
Endeavor’s conference call with analysts today is expected to give Wall Streeters a chance to grill company executives, including CEO Ari Emanuel and Mark Shapiro, president and chief operating officer, on the news earlier this month that Endeavor is considering “strategic alternatives” for some of its businesses.
Controlling shareholder Silver Lake, meanwhile, has said it intends to take the company private. “Silver Lake firmly believes in Endeavor’s business and is not interested in selling its shares in Endeavor to a third-party nor in entertaining bids for assets that are a part of Endeavor,” the private equity firm said on Oct. 25.
Endeavor’s quarter was once again paced by its Owned Sports Properties, the unit that houses its 51% holdings in TKO Group. (TKO delivered its first quarterly earnings report since its Sept. 12 launch on Tuesday.)
“Our results in the third quarter demonstrate the strength of our diversified portfolio and leading position in sports and entertainment,” said Emanuel in a statement. “We are making good progress on our TKO integration efforts, setting ticket sales or attendance records at many of our live events, and continuing to benefit from demand for premium content and experiences. Our focus remains on maximizing shareholder value through capital return initiatives including our share repurchase program and dividend payments, as well as our recently announced evaluation of strategic alternatives.”
For the quarter that marked the end of the Writers Guild of America strike, Endeavor delivered revenue of $1.34 billion (up from $1.2 billion in Q3 2022) and adjusted earnings before interest, taxes, depreciation and amortization of $311.6 million (up from $303 million). Net income was a $116 million loss. Total operating expenses took a nearly $300 million jump from the year-ago quarter ($1.06 billion) to $1.3 billion.
Revenue at Owned Sports Properties was up 19% (to $479.7 million) on the acquisition of WWE, which is now part of the TKO Group holdings stock in tandem with Endeavor’s dominant MMA league UFC. Adjusted earnings were up 21% year-over-year to $237.4 million.
Endeavor’s Representation segment, which includes WME, was the second-biggest contributor to revenue at $385.6 million (down 0.7%) and adjusted EBITDA at $96.3 million (down 27%).
More to come
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