Endeavor’s UFC Gives It a Fighting Chance on Wall Street

The Ari Emanuel-led entertainment conglomerate narrowly misses analyst forecasts for revenue as it reports a loss of $225.7 million in the fourth quarter

Endeavor Earnings
Photoillustration by TheWrap

Endeavor Group reported a fourth-quarter loss of $225.7 million Tuesday, while posting strong annual results in its second year as a publicly traded company and projecting double-digit increases for year three.

The sports and entertainment conglomerate run by Hollywood mogul Ari Emanuel reported revenue of $1.26 billion for the quarter. That fell just short of a forecasted $1.27 billion, according to analysts surveyed by Zacks Investment Research, and was down 16% from its $1.505 billion revenue in the fourth quarter of 2021.

The company reported annual revenue of $5.28 billion, right in the middle of its projected range of $5.26 billion to $5.33 billion, and above a Zacks forecast of full-year revenue of $5.27 billion for 2022.

Endeavor prefers to measure earnings before interest, tax, depreciation and amortization, or EBITDA, which amounted to $239 million for the fourth quarter and $1.164 billion for the year 2022.

“We are encouraged by our performance in our first full year as a public company,” said Endeavor CEO Ari Emanuel. “Our business has proven resilient despite ongoing macroeconomic headwinds. As 2023 comes into focus, we remain confident in Endeavor’s ability to deliver long-term value given our position on the supply side of premium content and live events and experiences.”

Among the highlights for the year are its Ultimate Fighting Championship league which saw 21 consecutive sellouts, bringing its total to 29 consecutive sellouts since returning to live audiences. The overall owned sports properties portion of the company posted quarterly revenue of $301.4 million, up $24.1 million, or 9%, from the previous year’s quarter.

Endeavor’s annual revenue in this department was $1.3 billion, up $224.1 million or 20% from 2021. The company credited that to increased media rights fees at UFC and greater sponsorship, licensing and commercial pay-per-view revenue from an increase in live-audience UFC events. Endeavor also bought ten minor league baseball teams in December of 2021 and sold them in September of last year.

The segment’s adjusted EBITDA was $142.4 million, up $17.3 million, or 14%, compared to the prior year’s respective fourth quarter, and was $648.2 million for the year, up $110.5 million, or 21%, compared to the prior year.

Revenue in the events, experiences and rights segment grew to $41 million last quarter, an 8% jump from the previous quarter. Annual revenue in that business unit totaled $2.5 billion, up $420.7 million, or nearly 21%, compared to the prior year.

This was driven by heightened consumer demand and lifted restrictions for live events and premium experiences such as the Miami Open, Super Bowl LVI, and the NCAA March Madness games, as well as the inclusion of the Madrid Open and OpenBet.

The segment’s adjusted EBITDA was $52.4 million for the quarter, down $2.4 million, or 4%, compared to the prior year’s quarter. The EBITDA was $342.6 million for the year, up $127.1 million, or 59%, compared to the prior year.

The representation segment, which consists of the WME talent agency, posted revenue of $408.5 million for the quarter, down $309.4 million or 43% compared to the prior-year quarter. It notched $1.5 billion in revenue for the year, down $447.6 million, or nearly 23% compared to 2021. The large drop came from the disposition of the Endeavor Content business, which was sold in January 2022 and accounted for $737.4 million in revenue in 2021.

The segment’s adjusted EBITDA was $123.9 million for the quarter, up $5.5 million, or nearly 5%, compared to the prior-year quarter. EBITDA was $469.8 million for the year, up $86.4 million, or nearly 23%, compared to the prior year.

Endeavor forecasts revenue ofbetween $5.825 billion and $5.975 billion for the next year, which would be 12% growth at the midpoint. It projects EBITDA of between $1.25 billion and $1.305 billion, which would be a 10% increase at the midpoint.