TKO · Q2 2025 Earnings
BullishTKO Group Holdings
Reported August 6, 2025
30-second summary
TKO posted Q2 FY2025 revenue of $1.308B (+9.6% YoY) with adjusted EBITDA of $526.5M at a 40% margin, and raised full-year guidance to $4.63–4.69B revenue and $1.540–1.560B EBITDA. The newly-disclosed ESPN deal for WWE Premium Live Events lands at $325M AAV — a step-up from Peacock's $180M — and sets the read-through for the still-pending UFC renewal, which management says is "in the home stretch." The story this quarter is WWE (+21.8% YoY, 59% segment margin) doing the heavy lifting while UFC laps a tough Sphere comp and IMG drags.
Headline numbers
EPS
Q2 FY2025
$1.17
Revenue
Q2 FY2025
$1.31B
+9.6% YoY
Free cash flow
Q2 FY2025
$0.38B
Operating margin
Q2 FY2025
28.1%
Key financials
Q2 FY2025| Metric | Q2 FY2025 | YoY |
|---|---|---|
| Revenue | $1.31B | +9.6% |
| EPS | $1.17 | — |
| Operating margin | 28.1% | — |
| Free cash flow | $0.38B | — |
Guidance
Prior quarter data unavailable — comparison not possible.
Segment performance
Q2 FY2025| Segment | Q2 FY2025 | YoY |
|---|---|---|
| UFC | $0.416B | +5.4% |
| WWE | $0.556B | +21.8% |
| IMG | $0.307B | -4.1% |
| UFC Adjusted EBITDA | $244.8 million | — |
| UFC Adjusted EBITDA Margin | 59% | — |
| WWE Adjusted EBITDA | $329.8 million | — |
| WWE Adjusted EBITDA Margin | 59% | — |
Profitability
Q2 FY2025| Segment | Q2 FY2025 |
|---|---|
| Adjusted EBITDA | $526.5 million |
| Adjusted EBITDA Margin | 40% |
| Free Cash Flow Conversion | 71% |
| Operating Cash Flow | $396.2 million |
Management tone
The Q&A is where the directional shift lives: management has moved from defending the WWE/Netflix architecture to actively selling a multi-partner monetization stack. Shapiro's framing — that the ESPN PLE deal at $325M AAV vs. Peacock's $180M validates platform portability ("WWE Network to Peacock to ESPN") — is the first quarter where management has publicly priced the next-cycle rights step-up with a concrete number rather than directional language. The ad-inventory carve-out and retained NXT/documentary/archive rights are being framed as separate monetization channels rather than concessions, which reads as confidence that TKO can sell the bundle in pieces.
On UFC, the tone is measured but pointed: Shapiro denied negotiations are difficult, called the deal "in the home stretch," and pointed to published trade-press comments from ESPN's Jimmy Pitaro that, in Shapiro's reading, do not rule out UFC. Schweimer reinforced the margin story, flagging WWE's 59% Q2 print as sustainable and tying it explicitly to the ESPN deal economics.
Q&A highlights
Ben Swinburne · Morgan Stanley
How will the WWE PLE move to ESPN impact rights valuation and fan engagement compared to Peacock performance? Why didn't Netflix retain these rights given they have WWE content globally? What is TKO's view on multiple partners versus single-platform consolidation?
Mark Shapiro explained the decision to diversify partners rather than consolidate all content in one basket. ESPN deal valued at $1.625B over 5 years ($325M AAV) vs. prior Peacock deal at $900M total ($180M AAV). ESPN's linear platform reach, B2C strategy, and audience demographics outweighed slightly higher monetization available elsewhere. WWE audience has demonstrated strong platform migration (WWE Network to Peacock to ESPN). Non-PLE content (NXT, documentaries, archive) retained for incremental monetization. Ad inventory sales represent new revenue opportunity not available in prior deals.
Brandon Ross · Lightshed
Why was WWE PLE deal announced before UFC? Is UFC deal more challenging than expected? Does ESPN+WWE success make ESPN+UFC less likely? Could Netflix be more likely as UFC partner?
Mark Shapiro denied UFC negotiations have been more challenging. Timing reflects sequential deal closures across five properties in market simultaneously (UFC numbered/fight nights, WWE PLEs, Zufa Boxing, PBR). UFC negotiations are in 'home stretch' with update to come. ESPN's Jimmy Vitaro stated ESPN is not ruled out for UFC, pointed to past UFC+ESPN+ success as foundation. Deals are mutually exclusive; each property's negotiation independent. Strategy remains balancing monetization with reach and brand value.
David Konofsky · JPMorgan
Why retain non-PLE content (NXT, documentaries, archive) rather than include in ESPN deal? Are ancillary rights being reserved for existing partners?
Mark Shapiro explained retention strategy is focused on incremental monetization opportunities. Goal is margin expansion and achieving investment-grade status. Separated content allows NXT PLEs to be sold at separate fees, documentaries sold individually at optimal timing and market rates, and archive content maximized. Andrew highlighted 'halo effect' benefits from ESPN partnership that will drive incremental partnerships and sponsorship revenue. Ad inventory within ESPN deals creates new partnership monetization channel. Strategy reflects belief that not every asset should be bundled.
Steven Lezesky · Goldman Sachs
What specific areas drove H1 2025 outperformance vs. guidance for UFC and WWE? What headwinds or tailwinds should we model for H2 2025?
Andrew outlined three primary drivers of outperformance: live events, IP strength, and partnerships (beyond contractual escalations). Q3 specific headwinds: UFC 306 at Sphere in Q3 2024 (highest-grossing gate, title partner sponsor) will not recur in H2 2025; UFC numbered events only 2 in Q3 vs. 3 prior year; SmackDown reverts to two hours in Q3 (no full-year impact but adverse Q3 timing); delayed Saudi WWE PLEs to 2026 (~200bps margin impact to 2025). Tailwinds: SummerSlam expanded to two nights; most-viewed SummerSlam in history; margin trajectory on WWE 59% (Q2) vs. 40% (2023), 50% (2024); ESPN deal expected to drive partnerships and site fee benefits.
Peter Supino · Wolf Research
Guidance implies ~30% incremental margins, but upside attributed to near-100% flow-through items (site fees, live events, sponsorships). Help reconcile incremental margin math. Beyond UFC renewal, what is the long-term growth algorithm for TKO?
Andrew addressed incremental margin compression by noting H1 had unusually strong live event/sponsorship mix with near-100% flow-through, but H2 includes headwinds: lack of UFC 306-type events, SmackDown two-hour format change, fewer numbered events, delayed Saudi PLEs to 2026. Full-year 33% margin guidance reflects this balance. Mark outlined multi-year growth attributes beyond 2026 UFC renewal: (1) continued UFC/WWE revenue stream expansion (partnerships, site fees, live events); (2) IMG/On Location/PBR integration synergies (ahead of $15M 2025 target, $40M run-rate
What to watch into next quarter
UFC media rights deal close. Management said "home stretch" — watch for the AAV print and whether ESPN is included alongside or instead of incumbents. Read-through baseline: the WWE PLE step-up to $325M AAV (~1.8x prior) is the comp the market will apply.
WWE Q3 segment margin. Q2 hit 59% (up from 55% YoY). Watch whether SummerSlam two-night expansion and SmackDown reverting to two hours pressure the print, and whether 59% holds as the new baseline rather than a Q2 peak.
IMG revenue trajectory. -4.1% YoY in Q2 with a swing to 9% adj EBITDA margin. Watch whether On Location/PBR synergy contribution (tracking ahead of $15M 2025 in-year, $25M run-rate now, $40M run-rate by end of 2026) inflects the segment back to revenue growth in H2.
Implicit Q3 setup. Management flagged Sphere non-recurrence and two UFC numbered events vs. three. Q3 will likely look soft on the surface; watch whether the FY guide raise survives the Q3 print.
FCF conversion durability. 71% conversion in Q2 with $375M of FCF. Management targets full-year conversion in excess of 60% (excluding ~$300M of non-recurring amounts and the FIFA World Cup restricted cash benefit). Watch whether the partnership/sponsorship mix continues to lift the trajectory.
Sources
- TKO Group Holdings Q2 FY2025 press release / 8-K Exhibit 99.1 — https://www.sec.gov/Archives/edgar/data/1973266/000095017025104031/tko-ex99_1.htm
- TKO Q2 FY2025 earnings call (prepared remarks from Ari Emanuel and Andrew Schweimer; Q&A with Morgan Stanley, Lightshed, JPMorgan, Goldman Sachs)
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