Liberty Formula One C’s 2026 Q2 Call: SG&A Drivers and MotoGP Investment Signals Clash

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Date of Call: Aug 6, 2026

Financials Results

• Revenue: Year-to-date revenue declined 15% at F1, driven by a 44% decline in race count in Q2 and calendar variance; MotoGP revenue increased year-to-date.
• Operating Margin: Team payments as a percent of pre-team share adjusted EBITDA were 61.7% year-to-date at F1; MotoGP adjusted EBITDA grew year-to-date.

Guidance:

• F1 expects to return to a full 24-race calendar next season after a 23-race calendar in 2026.
• For the remainder of the Concord Agreement term through 2030, F1 expects team payments as a percent of adjusted EBITDA to remain relatively stable, with roughly 200 basis points improvement in leverage in 2026.
• MotoGP completed manufacturer and teams agreement through 2031, establishing a stable framework for investment and growth.
• Expect future reductions in MotoGP's debt margin as the business delevers.

Business Commentary:

Strong Performance in Formula One and MotoGP:

• Liberty Media's Formula One business experienced a 44% decline in race count for the quarter and a 27% decline year-to-date due to calendar changes, impacting revenue recognition.
• Despite the challenging race schedule, underlying business performance was robust, with growth in sponsorships, licensing, and paddock club demand.
• The decline in revenue was primarily due to calendar variability, but the company expects a return to a full 24-race calendar next season.

Media Rights and Partnerships:

• Liberty Media reported strong engagement with Apple TV, with viewership up 13% year-over-year and total hours watched increasing.
• The company is encouraged by the partnership with Apple, which is attracting a younger and more female audience.
• Media rights revenue was also impacted by a one-time revenue from the previous year's F1 movie release.

MotoGP's Revenue Growth:

• MotoGP's revenue increased year-to-date due to growth in race promotion and sponsorship revenue, despite a reduction in contractual media rights.
• The company completed agreements with all manufacturers and teams through 2031, establishing a stable framework for investment and commercial growth.
• New media agreements in Spain and Portugal, along with extensions in Malaysia and Silverstone, contributed to positive momentum.

Premium Hospitality and Licensing:

• Formula One saw strong demand for premium experiences, with the Paddle Club sold out for the rest of the season and House 44 expanding from nine to 13 locations.
• Licensing revenue is on a positive trajectory, with new agreements and partnerships, including multi-year deals with DK Books and Hashbro.
• The focus on experiential opportunities is expected to drive future revenue growth.

Financial Stability and Strategic Investments:

• Liberty Media maintained a net leverage ratio of 3.4 times, with F1 and MotoGP in compliance with their debt covenants.
• The company is focused on supporting organic growth, maintaining a prudent balance sheet, and evaluating complementary opportunities.
• Strategic investments in personnel and technology are being made to enhance commercial capabilities and drive long-term growth.

Sentiment Analysis:

Overall Tone: Positive

• Management expressed being 'thrilled' with performance, citing 'incredible racing,' 'positive momentum,' and 'very happy with our progress.' They noted 'strong demand,' 'record attendance,' 'growth in TV audiences,' and 'encouraged by the Apple deal' and 'recent renewals.' Statements include: 'We are confident that the foundation we are building today will drive enduring value' and 'We are extremely encouraged by our early momentum.'

Q&A:

• Question from Cutgun Morale (Evercore ISI): Concerns about underlying media rights trends beyond the Apple deal and the trajectory of media rights revenue as deals are renewed. Also, asked about profitability trends and financial impacts of the 10-year Las Vegas Grand Prix extension.
  Response: Management feels good about media rights, citing strong product value and long-term partner stability. They are encouraged by the Apple deal and recent renewals. On Las Vegas, they noted ticket sales are trending well ahead of last year, and the 10-year extension provides greater certainty to invest in long-term improvements, enhancing profitability.

• Question from Steven Lechek (Goldman Sachs): Asked about underlying F1 business performance absent calendar variability and any parts exceeding expectations.
  Response: Management highlighted strong growth in sponsorships, licensing, and paddock club demand as key areas performing well despite the lower race count.

• Question from Steven Lechek (Goldman Sachs): Asked about the drivers of the year-over-year increase in SG&A at F1 and outlook for the back half of the year and 2027.
  Response: SG&A increase driven by marketing (lapping 75th anniversary costs), FX impacts, higher personnel and IT costs, and a full year of integrated sales function from Quint. Future impacts should be minimal.

• Question from Matt Condon (Citizens Bank): Asked about key levers to grow the commercial opportunity at F1.
  Response: Focused on digitalization, renewing major partners early, leveraging AI opportunities, and expanding licensing and content offerings to monetize partnerships and reach.

• Question from Matt Condon (Citizens Bank): Asked for an overview of the key points of the new MotoGP manufacturers and teams agreement.
  Response: The five-year deal aligns all parties on a shared vision to evolve the sport while maintaining heritage, includes cost optimization, and fosters collective investment and commercial growth.

• Question from David Joyce (Seaport Research Partners): Asked how much of MotoGP's cost base is allocated to incremental growth initiatives and about expiring sponsorships that could be upgraded.
  Response: Incremental investments in MotoGP are not material, primarily in marketing and personnel. Sponsorship strategy focuses on expanding beyond the current endemic base to broader opportunities as the sport grows.

• Question from Brent Navon (Bank of America): Asked how many more sprint races can be added and how they filter through the business.
  Response: Sprint races will increase next year; they provide an incremental revenue stream and create commercial leverage while maintaining scarcity value.

• Question from Brent Navon (Bank of America): Asked if the absence of Germany in the Sky deal and potential race addition indicate viewing Germany as an untapped growth market.
  Response: Germany is a market in flux with new digital players; adding a race could positively impact media rights and commercial opportunities in the medium term.

• Question from Ian Moore (Bernstein Research): Asked about supply versus demand dynamics for premium hospitality and paddock club, given past capacity increases.
  Response: Demand remains strong; for 2028, all Pado Club hospitality is already allocated, signaling the need to extend capacity and pricing, supported by strong partner interest.

Contradiction Point 1

Drivers of SG&A Expense Growth

Inconsistent identification of primary cost drivers for SG&A increases.

Steven Lechek (Goldman Sachs) - Steven Lechek (Goldman Sachs)

2026Q2: SG&A increases are driven by: a) lower marketing spend (lapping last year's 75th anniversary costs), b) FX headwinds... c) higher personnel costs, and d) a full year of integrated sales functions from Quint. - Brian Wendling(CFO)

Can you discuss the investments driving the increase in SG&A at F1 and provide guidance on how SG&A expenses are expected to trend in the back half of the year and into 2027? - Steven Lechek (Goldman Sachs)

2026Q2: The increase is due to: a) higher personnel costs, b) higher IT investment, c) a full year impact from integrating the sales function from Quint, and d) FX headwinds... - Brian Wendling(CFO)

Contradiction Point 2

MotoGP Investment Phase and Cost Allocation

Contradiction on whether incremental investment in MotoGP is material.

David Joyce (Seaport Research Partners) - David Joyce (Seaport Research Partners)

2026Q2: Incremental investments in MotoGP are not material in the reported quarter. - Brian Wendling(CFO)

How much of the Q3 cost base was allocated to incremental growth initiatives in MotoGP, mirroring Formula One's approach, and what portion of current sponsorships is expiring within the next year, potentially allowing for upgraded partnerships or expanded relationships driven by fan engagement growth? - David Joyce (Seaport Research Partners)

2026Q2: Investment phase is not pronounced. Year-to-date, there are higher marketing expenses and some personnel costs, but SG&A is relatively flat. - Brian Wendling(CFO)

Contradiction Point 3

Paddock Club Hospitality Demand Outlook

Contradiction on the signal strength for sustained demand for premium hospitality.

Ian Moore (Bernstein Research) - Ian Moore (Bernstein Research)

2026Q2: Demand for premium experiences is very strong. Signals include the fact that Paddock Club hospitality for 2028 is already fully allocated to teams... - Stefano Domenicali(CEO)

What signals indicate that demand for premium hospitality and paddock club experiences is outpacing supply, despite past capacity challenges? - Ian Moore (Bernstein Research)

2026Q2: The focus is on extending this through innovative new products and partnerships, not just pricing. The full-strength market and solid commercial partnerships provide confidence in continued demand. - Stefano Domenicali(CEO)

Contradiction Point 4

Media Rights Deal Renewals and Strategic Positioning

Contradiction on the maturity and focus of media rights discussions.

What are the key points of the Cutgun Morale report by Evercore ISI? - Cutgun Morale (Evercore ISI)

2026Q2: Media rights discussions are ongoing globally... The key is controlling content and product to drive value. - Derek(CEO), Stefano(CFO)

How should we think about the trajectory of meteorites' revenue as media rights deals get renewed or extended? - Ryan Gravett (UBS Investment Bank)

2025Q4: Media rights strategy is dynamic and tailored to each market. Interest and offers are strong globally. - Stefano Domenicali(CFO)

Contradiction Point 5

Las Vegas Grand Prix Profitability and Revenue Contribution

Contradiction on the quantifiable profitability and growth drivers of the Las Vegas GP.

Cutgun Morale (Evercore ISI) - Cutgun Morale (Evercore ISI)

2026Q2: The event is becoming a major F1 product with strong ticket sales and economic impact... profitability should be positioned to improve as well. - Derek(CEO), Stefano(CFO)

Can you provide details on the year-over-year trends in profitability? - Bryan Kraft (Deutsche Bank AG)

2025Q4: Vegas has become a strong cash flow generator... Future plans will further enhance its impact on the P&L. - Stefano Domenicali(CFO), Brian Wendling(CFO)

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