Endeavor Q4 Revenue Grows 25% to $1.58 Billion, Boosted by Owned Sports Properties, Representation Divisions

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The talent and media agency holding company continues to undergo a review of strategic alternatives as majority owner Silver Lake works towards a proposal to take it private

Endeavor Earnings
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Endeavor Group Holdings’ revenue increased 25% year over year during the fourth quarter of 2023, fueled by growth in its owned sports properties and representation businesses. The talent and media agency holding company also narrowed its net loss by 85%, though the company posted a surprise earnings per share loss.

Here are the top-line results for the fourth quarter and the full year:

Net income: A loss of $29.3 million for the quarter and a profit of $557.5 million for the full year.

Revenue: $1.583 billion for the quarter, compared to $1.55 billion expected by Zacks Investment Research. For the full year, revenue was $5.96 billion.

Earnings Per Share: a diluted loss of 3 cents, compared to profit of 16 cents expected by Zacks Investment Research. For the full year, the company posted a profit of $1.14 per share.

Adjusted EBITDA: $292.8 million for the quarter and $1.216 billion for the full year.

Earnings were hit by $29 million in legal and regulatory costs, compared to $4.8 million tin the year ago period — including a $20 million antitrust settlement for WWE. Restructuring costs and impairment charges totaled $56 million.

“2023 was a transformational year for Endeavor as we strengthened our positions in sports and entertainment through many of our industry-leading assets,” CEO Ari Emanuel said in a statement. “Endeavor’s work with TKO to secure innovative media rights deals and landmark partnership agreements is proving our thesis, and we continue to benefit from demand for premium content and live experiences. We remain focused on maximizing shareholder value through quarterly dividend payments and our evaluation of strategic alternatives.”

Cash and cash equivalents for the quarter totaled $1.167 billion, compared to $1.338 billion in the year ago period, while total debt was $5.028 billion, compared to $5.046 billion a yer ago.

The latest quarterly results come as Endeavor’s majority owner Silver Lake has been working towards a proposal to take the company private. The private equity firm, which holds approximately 71% of the company’s voting power, is expected to make a bid in the coming weeks, according to Bloomberg.

Endeavor also continues to undergo a review of “strategic alternatives” due to the “continued dislocation” between its public market value and the intrinsic value of its underlying assets. Shares of Endeavor are down 11.32% since the company went public in April 2021.

As part of the review, Endeavor will not consider the sale or disposition of its interest in TKO Group Holdings, which owns and operates the Ultimate Fighting Championship and World Wrestling Entertainment.

The company, which is not commenting on the review until it determines a disclosure is necessary or advisable and did not take questions during the earnings call for this reason, has not set a deadline or definitive timetable for its completion and can make no assurance that the process will result in any particular outcome.

Revenue in Endeavor’s Owned Sports Properties segment, which includes TKO, surged 113% year over year to $642.8 million during the quarter and 36% year over year to $1.82 billion for the year.

The increase for 2023 was primarily attributable to the WWE acquisition, which contributed $383 million; increases at UFC from higher media rights fees, including one additional PPV event; higher live event revenue, including five more events with live audiences during the year; and an increase from partnerships. The revenue increase was also attributable to greater demand for PBR event tickets and the second season of the PBR Teams series. The increases were offset by the sale of Diamond Baseball Holdings.

Adjusted EBITDA for the segment grew 58% to $224.7 million for the quarter and 28% to $827 million for the year, primarily attributable to the WWE acquisition.

Representation segment was revenue grow 5% to $427.4 million in the fourth quarter and 2% to $1.54 billion for the year.

The Hollywood strikes’ impact on segment revenue for the year was more than offset by growth in WME’s music, sports, and fashion divisions, as well as increases at 160over90, licensing, and nonscripted content production content deliveries.

The segment’s adjusted EBITDA fell 16.5% to $103.4 million for the quarter and 17% to $391.1 million for the year.

Endeavor declined to give 2024 guidance, citing the strategic review process, and did not take any questions from analysts.

Events, Experiences and Rights segment revenue fell 8% year over year to $414.5 million for the year and 1% to $2.17 billion for the year.

For the year, segment revenue was primarily impacted by the $1.25 billion sale of IMG Academy in June, partially offset by the inclusion of Barrett-Jackson for the full year, as well as increases from growth in ticket sales and partnerships from new and existing events including the Madrid Open and Miami Open tennis tournaments. Media production revenue also increased primarily due to new contracts, including with Major League Soccer, as well as the timing of biennial and quadrennial events that occurred in 2023.

Adjusted EBITDA for the segment tumbled 55% to $13.7 million for the quarter and 23% to $228.1 million for the year.

Revenue in the Sports, Data and Technology segment climbed 5% year over year to $113.6 million for the quarter and 80% year over year to $469.8 million for the year. The revenue increase for 2023 was driven by the inclusion of OpenBet, as well as growth in IMG ARENA’s betting data and streaming portfolio.

The segment’s adjusted EBITDA fell 5% year over year to $20.5 million for the quarter, but jumped 31% to $62.7 million for the year.

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