TKO's Q3 2025: Contradictions in UFC Distribution, Media Rights Strategy, and Boxing Expansion

Date of Call: November 5, 2025

Financials Results

• Revenue: $1.12B, down 27% YOY
• Operating Margin: Adjusted EBITDA margin 32%, up from 15% in the prior year period

Guidance:

• Raised FY2025 revenue guidance to $4.69B–$4.72B and adjusted EBITDA to $1.57B–$1.58B (midpoint increases vs prior guidance).
• Targeting full-year 2025 free cash flow conversion in excess of 60%, excluding ~ $300M of nonrecurring items and FIFA World Cup restricted cash effects.
• Q4 2025: UFC expects 11 events (4 numbered) and 9 live-audience events vs 7 LY; WWE benefits from new Netflix and ESPN rights but has calendar shifts reducing PLE nights.
• 2026: expect full-year step-up from UFC Paramount rights and WWE ESPN PLEs; Zuffa Boxing JV launching January 2026.

Business Commentary:

* Media Rights and Partnerships: - TKO Group Holdings, Inc. secured landmark media rights deals, including a 7-year $7.7 billion agreement between UFC and Paramount, and a 5-year deal with ESPN for WWE premium live events. - The increase in media rights deals is attributed to the strong demand for sports content and the expansion of reach through strategic partnerships.

• Revenue and Financial Performance:
• Revenue for Q3 2025 was $1.12 billion, with adjusted EBITDA of $360 million, and an adjusted EBITDA margin of 32%.

• The decrease in revenue was due to the absence of revenue from the Paris Olympics, which was a loss-making event, while adjusted EBITDA increased significantly as a result of strategic partnerships and operational efficiencies.

• UFC and WWE Segment Performance:

• UFC generated $325 million in revenue and $166 million in adjusted EBITDA, while WWE reported $402 million in revenue and $208 million in adjusted EBITDA.

• The increase in WWE's revenue was driven by higher ticket sales, site fee revenue, and media rights production, while UFC's performance was affected by one less numbered event and the impact of UFC 306.

• Boxing Initiatives and Growth:

• The launch of Zuffa Boxing and the successful Canelo vs. Crawford fight generated a gate of over $47 million and over 41 million viewers on Netflix.
• The growth in boxing initiatives is driven by the potential to market Zuffa Boxing through high-profile events and secure additional media rights deals, enhancing brand visibility and revenue opportunities.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management called Q3 a "milestone quarter" (historic media rights deals, doubled dividend, $1B buyback) and said they raised full-year revenue and adjusted EBITDA guidance for the third consecutive quarter, highlighting negotiated long-term, high-margin media rights that provide multiyear visibility and expected margin expansion.

Q&A:

• Question from Stephen Laszczyk (Goldman Sachs): Why was Paramount the right partner for U.S., LatAm and Australia and how are you thinking about international partners/priority going forward?
  Response: Paramount won those territories by offering the best combination of brand, reach, marketing plan and rights fee; TKO will pursue international monetization country-by-country with multiple bidders to close its international fan-base monetization gap.

• Question from Stephen Laszczyk (Goldman Sachs): On WWE live events, is the re-rating mostly PLE-driven or are weekly events contributing; outlook for pricing vs capacity into 2026?
  Response: Live-event strength is driven by both PLEs and weekly shows—higher capacity and pricing plus reduced non-televised events created scarcity and pricing power.

• Question from Brandon Ross (LightShed Partners): What will Paramount's distribution model look like and will PPV remain internationally or be replaced by subscription?
  Response: Paramount will distribute via tiered subscription/all-you-can-eat for those territories; only a few markets (notably Australia and Canada) retain transactional PPV for numbered-event main cards.

• Question from Brandon Ross (LightShed Partners): With the UFC domestic deal done, what's the incremental flow-through to margins and will fighter pay rise/how structured going forward?
  Response: The rights deal will be meaningfully margin accretive (no specific percentage provided); fighter pay will increase for premium athletes, but compensation changes will be structured to remain consistent with historical margin levels.

• Question from Benjamin Swinburne (Morgan Stanley): Given boxing success, are you considering doing more wholly owned promotion or expanding beyond initial JV investments?
  Response: Super fights are a catalyst; TKO expects ~$10M services fee per fight and 2–4 fights/year, will use super fights to build Zuffa Boxing and monetize via commissions/partnerships, while remaining focused on executing core assets.

• Question from Benjamin Swinburne (Morgan Stanley): Given UFC/WWE performance, why not pursue larger acquisitions aggressively?
  Response: Management is actively searching but large, scalable assets are scarce; priority is executing existing strategy (including boxing) and pursuing M&A only if compelling opportunities arise.

• Question from Peter Supino (Wolfe Research): Can you quantify site-fee opportunity and how meaningful can it be in 2026 and beyond?
  Response: Site fees are a growing, high-margin revenue stream; 2026 will benefit from three large Saudi site fees and a pipeline of 60+ events under active discussion driven by an open calendar.

• Question from Peter Supino (Wolfe Research): How long has the site-fee team been at scale?
  Response: The dedicated site-fee team was scaled over the past ~3 months and now comprises roughly a six-person roster focused on monetization.

• Question from Ryan Gravett (UBS): How will removing the PPV paywall impact sponsor conversations and partnerships growth in 2026?
  Response: Removing the PPV paywall materially increases reach and sponsor interest; combining commercial inventory across media deals is a multi-year growth lever toward the $1B partnerships goal and has already increased inbound sponsor demand.

• Question from Vikram Kesavabhotla (Baird): Initial reactions to the ESPN relationship and how did the first PLEs perform versus expectations?
  Response: The ESPN launch exceeded expectations with broad cross-promotion (e.g., Wrestlepalooza coverage across ESPN platforms); ESPN provides strong marketing support though its DTC distribution scale will take time to mature.

• Question from Eric Handler (ROTH Capital): What's driven the rise in partnerships/marketing—more brands or pricing power?
  Response: Partnership growth is driven by both more brands and pricing power—new crossover sponsors and increased spending from existing partners as reach expands, yielding stronger inbound demand and pricing leverage.

Contradiction Point 1

Distribution Model with Paramount

It involves the change in the distribution model of the UFC main cards, which impacts the company's revenue strategy and market reach.

How does Paramount's distribution model differ from WWE's? - Brandon Ross (LightShed Partners, LLC)

2025Q3: Legacy transactional pay-per-view models remain in Australia and Canada. With Paramount, UFC's numbered event main cards will be distributed through tiered subscription, similar to WWE's U.S. domestic model shift. - [Responder's Name](CFO)

How do you assess WWE's PLE platform shift from Peacock to ESPN? What impact do you expect on reach and monetization? - Benjamin Daniel Swinburne (Morgan Stanley)

2025Q2: We did a deal with ESPN for WWE on a transactional basis. We wanted to diversify the content and the distribution globally and find the right balance for the ESPN deal and certainly will explore [opportunities] for subscription. - [Responder's Name](COO)

Contradiction Point 2

UFC Media Rights Strategy

It involves a shift in the strategic approach to UFC media rights negotiations, affecting the company's approach to balancing reach and revenue.

Why was Paramount chosen as the partner for LatAm and Australia, and what is the current focus on other international partnerships? - Stephen Laszczyk (Goldman Sachs Group, Inc., Research Division)

2025Q3: TKO is negotiating with various bidders for other regions, aiming for broader brand reach and increased high-margin revenue. - [Responder's Name](COO)

What is your approach to the UFC media rights negotiation, balancing reach and revenue? - Brandon Ross (Lightshed Partners)

2025Q1: We will be opportunistic but cautious amid economic uncertainties. - [Responder's Name](COO)

Contradiction Point 3

Site Fee Strategy and Impact

It involves the strategic focus and expected impact of site fees, which are crucial for financial growth and event execution.

Will site fees be a significant driver in 2026, and how is TKO approaching this? - Peter Supino (Wolfe Research, LLC)

2025Q3: Site fees are a strategic focus with a full-time team dedicated to generating revenue. The 2026 calendar offers greater flexibility for strategic site fee negotiations, with a team having recently grown to accommodate this focus. - [Responder's Name](CFO) and [Responder's Name](COO)

Can you provide details on the volume and growth rate of site fee deals, including their geographic distribution? - Eric Handler (ROTH Capital Partners, LLC, Research Division)

2025Q1: We are going to keep working to get site fee deals, and we believe it's a long-term win-win for us, as well as the venues. - [Responder's Name](COO)

Contradiction Point 4

Expansion into Boxing

It highlights differing strategies and commitments towards expanding into boxing, which could impact future growth opportunities and strategic focus.

Are there plans to expand into boxing beyond the joint venture structure, given the success of the Canelo-Crawford fight? - Ben Swinburne (Morgan Stanley, Research Division)

2025Q3: TKO is focused on growing Zuffa Boxing and super fights. Dana White will be involved in select events, with TKO receiving services fees and media deal commissions. - [Responder's Name](COO)

How will a potential repeal of the Ali Act affect your boxing plans, and what are your specific boxing strategies? - Brandon Ross (LightShed Partners)

2024Q4: We're in talks with Saudis to create a boxing league with TKO as the producer and promoter, aiming for consistent fights and four large-scale events each year. - [Responder's Name](COO)