# Context/Background Info
* The UFC and WWE recently merged to form TKO Group Holdings Inc ($TKO) – with TKO being the parent company of the two.
* TKO itself is majority-owned by Endeavour Group, who orchestrated the merger after buying out the UFC in 2016, and the WWE in April 2023 from Vince McMahon.
* In post-market trading on 7th November, TKO released their first quarterly earnings report for the Q3 of 2023, which runs from July 1st – September 30th.
* Due to the company being newly formed and both the WWE and UFC having been privately owned previously, it’s quite time-consuming to go through the different necessary financial documents in order to understand and evaluate the financials of $TKO.
* So, to improve comprehensibility, I have tried to put some of the financial data together into tables, and summarised other important information into bullet points.
* If you want to research for yourself or double check my numbers (please do), the data/info here I obtained from the [Q3 Earnings Release](https://investor.tkogrp.com/files/doc_financials/2023/q3/TKO_3Q23-Earnings-Release_11-7-23_4pm_FINAL.pdf), the [Q3 10-Q Filing](https://d18rn0p25nwr6d.cloudfront.net/CIK-0001973266/b39a1476-184e-49e3-80b0-8284414ec066.pdf), and this [TKO Historical Financial Info Document](https://investor.tkogrp.com/files/doc_presentations/TKO_Historical-Financial-Information_11-1-23_2pm.pdf).
# Recent Highlights & Developments
* UFC held 13 successful events with strong viewership and attendance, setting all-time revenue records at the respective venues.
* WWE secured a five-year domestic media rights agreement with NBCUniversal for SmackDown starting in October 2024.
* WrestleMania 40, scheduled for April 2024 in Philadelphia, set a record by selling over 90,000 tickets in a single day, surpassing the gate record from WrestleMania 39.
* UFC signed a significant multi-year sponsorship deal with AB InBev, making them the exclusive “Official Global Beer Partner of UFC” effective from January 1, 2024.
* UFC expanded its presence in the Middle East North Africa (MENA) region through a partnership extension with the Department of Culture and Tourism – Abu Dhabi. This includes hosting numbered events through 2028 as well as up to 3 Fight Nights to the region annually, including the first event in Saudi Arabia in March 2024.
* Since the merger on September 12th, management has been focused on the integration of WWE and UFC and strategy execution, which includes finding cost ‘synergies’ and exploring international markets.
# Financial Statements
**TKO Revenue from Q1’22 – Q3’23**
||Q1 2022 (millions)|Q2 2022 (millions)|Q3 2022 (millions)|Q4 2022 (millions)|Q1 2023 (millions)|Q2 2023 (millions)|Q3 2023 (millions)|TTM |
|:-|:-|:-|:-|:-|:-|:-|:-|:-|
|UFC|$259.6|$268.1|$340.7|$271.7|$306.7|$305.2|$397.5|1.28 B|
|WWE|$333.4|$328.2|$304.6|$325.3|$297.6|$410.3|$287.3|1.32 B|
|Merged|**$593.0**|**$596.3**|**$645.3**|**$597.0**|**$604.3**|**$715.5**|**$684.8**|**2.6 B**|
​
**TKO Earnings (Adj. EBITDA) from Q1’22 – Q3’23**
||Q1 2022 (millions)|Q2 2022 (millions)|Q3 2022 (millions)|Q4 2022 (millions)|Q1 2023 (millions)|Q2 2023 (millions)|Q3 2023 (millions)|TTM (Trailing Twelve Months)|
|:-|:-|:-|:-|:-|:-|:-|:-|:-|
|UFC|$161.7|$160.3|$204.5|$154.1|$186.3|$188.2|$238.3|$766.9|
|WWE|$142.9|$121.0|$122.5|$126.1|$117.0|$173.1|$102.0|$518.2|
|Corporate|($43.1)|($42.1)|($45.3)|($49.3)|($46.5)|($47.0)|($42.1)|($184.9)|
|**Combined**|**$261.5**|**$239.2**|**$281.7**|**$231.1**|**$256.8**|**$314.3**|**$298.2**|**$1.10 B**|
# Key Figures from Revenue/EBITDA Statements:
* Revenue for the last 12 months was $2.6 Billion compared to $2.43 Billion in FY’22
* 6% Revenue increase from Q3’22 to Q3’23
* $1.1B EBITDA in last 12 months compared to $1.01B in FY’22
* Q3’23 EBITDA 6% higher than in Q3’22
# Merger/Integration Costs
* For the three and nine months ending on September 30, 2023, the company incurred $67.5 million and $82.5 million in merger and acquisition related costs.
* During the same periods, the company also had $31.6 million in restructuring, severance, and impairment costs, including $16.5 million in equity-based compensation expenses.
# Balance Sheet Highlights
* Cash on hand: Cash and equivalents amount to **$188.6 million**.
* Current Ratio: Current assets total $501.0 million, while current liabilities amount to $399.5 million. Therefore, the **current ratio is about 1.26.**
* Debt/Equity Ratio: Long-term debt is $2.72 Billion, and total stockholders’ equity is $8.96 Billion. So **debt/equity ratio is approximately 0.30.**
* Assets/Liabilities Ratio: Total assets amount to $12.74Billion, and total liabilities are $3.65 Billion. Therefore, the **assets/liabilities ratio is 3.38.**
# Other Financial Highlights
\*The following figures do not include any results for WWE from before September 12th
* Free Cash Flow of $247.7 Million in the 9 months preceding 30th September
* Cash flows generated in Q3 by operating activities were $67.0 million, a decrease of $71.3 million from $138.3 million, primarily due to lower net income.
* Free Cash Flow in Q3 was $63.6 million, a decrease of $72.5 million from $136.1 million, primarily due to the decrease in cash flows generated by operating activities.
Hope some of you find this helpful. Please let me know if I have gotten anything wrong here.
Also, what are your thoughts/opinions on $TKO as a long-term investment?