Endeavor Delivers Solid Q4 and Full-Year 2022 Gains as UFC Grows and Debt Load Drops

Endeavor rode the wave of demand for live sports and entertainment experiences to deliver solid revenue and adjusted earnings gains for the fourth quarter and full-year 2022.

The company also made progress on shaving down its debt load, which has been a millstone for the parent of UFC, WME and other major industry players ever since Endeavor went public in 2021. Over the course of 2022, the company made about $500 million in debt payments, most of which were made in Q4, to bring its total long-term debt to just $5.17 billion, from $5.63 billion as of the end of 2021.

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For the fourth quarter, Endeavor generated revenue of $1.26 billion, down 16% year over year, a decline due to the sale of its content production business to Korea-based CJ ENM in January 2022. (Excluding Endeavor Content, revenue would have been up 7% for Q4.) The company’s adjusted earnings before interest, taxes, depreciation and amortization came in at $239.6 million (compared with EBITDA of $229.5 million in Q4 2021). On a net income basis, the company posted a loss of $225.7 million (versus a net loss of $19.5 million in the year-earlier period).

For the year, the company produced $5.268 billion in revenue, up 4% from 2021, and $1.2 billion in adjusted EBITDA, up 21% from last year. Net income for the year reached $321.7 million, compared with a loss of $467.4 million for 2021.

“We are encouraged by our performance in our first full year as a public company,” Ariel Emanuel, CEO of Endeavor, said in prepared remarks. “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.”

Emanuel commented on the possibility of a writers strike amid upcoming negotiations between the WGA and major studios, set to begin March 20. “I’ve been through many strikes,” he said, adding that he had “no idea” how long any such looming work-stoppage could last. According to Emanuel, Endeavor is “well positioned” in the event that there is a strike, noting that writing and directing is a relatively small portion of its representation business. “I think we’re differently positioned from others if there is a strike,” he said.

For 2023, Endeavor provided guidance for revenue of $5.825 billion-$5.975 billion, which would represent 10.6%-13.4% (12% at the midpoint), and adjusted EBITDA of $1.25 billion-$1.305 billion, representing 10% growth at the midpoint.

Endeavor’s Owned Sports Properties unit was once again the star of the Q4 earnings. The unit housing UFC and PBR saw a 9% gain in revenue to $301.4 million. Adjusted EBITDA for the segment was up 14% to $142.4 million. In 2022, UFC saw 21 consecutive event sellouts (bringing total to 29 consecutive sellouts since the MMA franchise returned to live audiences), notched record sponsorship sales volume and renewed 10 international media rights deals (which Endeavor said in aggregate more than doubled average annual values).

Revenue in the company’s Representation segment declined 43%, to $408.5 million for Q4. The decrease was primarily due to $332.8 million of revenue in the prior-year quarter from the Endeavor Content business. The segment’s adjusted EBITDA was $123.9 million for the quarter, up nearly 5% compared with the prior-year quarter.

Endeavor’s Events, Experiences & Rights business saw Q4 revenue increase 8%, to $557.7 million. The group’s full-year revenue was up nearly 21%, to $2.5 billion, which Endeavor said was driven by heightened demand and lifted restrictions for live events and premium experiences including the Miami Open, Super Bowl LVI and the NCAA March Madness tournament. Revenue growth was offset by factors including the expiration of certain media rights deals and the sale of the Miss Universe Organization to Thailand’s JKN Global Media. The segment’s adjusted EBITDA was $52.4 million for the quarter, down 4% compared with the prior-year quarter.

Starting with the first quarter of 2023, Endeavor will start reporting results for a new, fourth segment: Sports Data and Technology, which will encompass the company’s IMG Arena sports and data and content business and OpenBet, the sports-gambling tech company it bought for $800 million in a deal that closed in September 2022.

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