UFC, Representation, Touring and Content Production Drives Solid Q3 Results for Endeavor

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Endeavor delivered solid third quarter results powered by the recovery of attendance and demand in the company’s key markets including UFC, its talent representation units and content production.

“We continue to capitalize on the elevated demand for premium content and live events coming out of the pandemic,” remarked Ariel Emanuel, CEO of Endeavor. “Given our unique positioning within the sports and entertainment industry and our ability to leverage powerful secular content trends, we see no signs of this momentum waning through the end of the year.”

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Endeavor delivered revenue of $1.4 billion, up sharply from the pandemic- battered year-ago quarter ($864.5 million) and net income of $63.6 million for the quarter, an improvement over the loss of $21.8 million logged in Q3 2020.

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Endeavor’s cash position also strengthened compared to the second quarter of this year, indicating that the company is not churning through cash as fast as it did last year. As of Sept. 30, cash on hand stood at $1.02 billion, up from $869.8 million as of June 30 of this year.

Projections through the end of the year were strong enough for Endeavor to increase its full-year guidance for Wall Street analysts of total revenue reaching $4.89 billion to $4.95 billion (up from a range issued last quarter of $4.8 billion-$4.85 billion). Adjusted earnings before interest, taxes, depreciation and amortization guidance was upped to $835 million to $845 million, from $765 million to $775 million range.

Endeavor has also chipped away at its debt burden. The quarter closed with $5.1 billion in long-term debt on the books, compared to $5.35 billion at the end of June.

On a conference call with analysts, Emanuel and Endeavor chief financial officer Jason Lublin cited pent-up demand for entertainment offerings and live experiences as benefitting the event and content focus of Endeavor’s operations.

The Endeavor executives talked up the company’s expanded focus on sports betting and related activities now that it is poised to close its acquisition of OpenBet software platform.

In fact, as of the fourth quarter Endeavor’s IMG Arena service and OpenBet will be combined into a new operating unit for financial reporting — a sign that Endeavor hopes to capitalize on investor interest in the growing demand for legal sports wagering.

“Right now in the marketplace sports betting is seen as a complement to the sports viewing experience,” Emanuel said.

That’s a positive for Endeavor given its activity in sports rights management, event production, high-end hospitality services around sports events like the Super Bowl.

“With our understanding of where (sports) rights are going…(Endeavor) is a unique offering that nobody else can bring to the table,” he said.

Revenue at Endeavor’s Owned Sports Properties unit bucked the uptrend and fell by $10.6 million from the year-ago quarter to $288.5 million. UFC held three more events in Q3 2020 than timing allowed for in 2021, plus the revenue from a contract termination fee recorded for the quarter last year all added up to a revenue drop. Adjusted EBITDA dropped to $134.7 million, from $166.7 million a year ago.

The Events, Experiences and Rights wing saw a 14% revenue spike to $446.3 million, in part because of shifting events and the calendar still recovering from COVID shocks and because of acquisition activity. Adjusted EBITDA swung to an $85 million profit compared to the year-ago loss of $9.6 million.

The Representation unit housing WME and Endeavor Content registered triple-digit revenue gains for the quarter, soaring to $664.7 million as the production arm delivered new and returning series including Hulu’s “Nine Perfect Strangers” and a new season of NBC game show “The Wall.” Adjusted EBIDTA also soared to $141.8 million, from $41.6 million.

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