TKO Group Holdings, Inc. (TKO) Q2 2026 Earnings Report, Transcript and Summary

Hello, everyone. Thank you for joining us, and welcome to TKO's Second Quarter 2026 Earnings Call. [Operator Instructions] I will now hand the conference over to Seth Zaslow, Head of Investor Relations. Seth, please go ahead.

Good afternoon, and welcome to TKO's Second Quarter 2026 Earnings Call. A short while ago, we issued a press release, which you can view on our Investor Relations website. A recording of this call will also be available via our website for at least 30 days. After prepared remarks from Ari Emanuel, TKO's Executive Chair and Chief Executive Officer; Mark Shapiro, TKO's President and Chief Operating Officer; and Andrew Schleimer, TKO's Chief Financial Officer, will open the call for questions. Mark and Andrew will be handling the Q&A. The purpose of this call is to provide you with information regarding our second quarter 2026 performance. I want to remind everyone that the information discussed will include forward-looking statements and/or projections that involve risks, uncertainties and assumptions. Please see our filings with the Securities and Exchange Commission for further detail. If these risks or uncertainties were to materialize or any assumptions prove incorrect, our results may differ materially from those expressed or implied on this call. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new information or future events, except as legally required. Our commentary today will also include non-GAAP financial measures, which we believe provide an additional tool for investors to use in evaluating ongoing operating results and trends. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP metrics can be found in our press release issued today as well as the information posted on our IR website. With that, I'll now turn the call over to Ari.

Thanks, Seth. TKO's unique ability to deliver one-on-one live events and experiences was front and center in the second quarter. Nothing illustrates this better than UFC Freedom 250 held in June. This event was a roaring success for our company, the UFC brand and the sport of mixed martial arts, exposure, earned media, audience expansion and a weekend long fan experience. TKO also played an integral role in the success of this year's record-breaking FIFA World Cup, where On Location staged the largest hospitality program in the tournament's history. Fans from 154 countries purchased more than 600,000 hospitality packages across 104 matches in 16 host cities. The qualitative feedback on our delivery bodes well for the continued growth of On Location and affirmatively sets the table for what will be a historic LA28 Olympic Games. TKO is poised for monumental growth at a time when consumers are deliberately choosing in-person experiences. Our content can't be manufactured or automated. And as the rise of AI inevitably changes how we spend our time, live events built on scarcity, marketable IP and durable repricing power win out. Physical experiences still command the biggest share of the wallet, and we're one of the very few companies that actually lead in this space across multiple properties at scale and globally. As we look to the back half of 2026, we're raising our full year guidance with conviction in our business is stronger than ever. And with that, Mark will take you through the quarter.

Thanks, Ari. We've consistently stated that 2026 is a year of execution for TKO. The second quarter confirmed that. From WrestleMania 42 in Las Vegas in April, to WWE's Clash in Italy in May, to UFC Freedom 250 in our nation's capital in June, to crowded stadiums around North America for the FIFA World Cup to IMG's partnership with the EuroLeague Final Four in Athens, TKO has served and captured fans while demonstrating excellence from every corner of the business. There was no bigger headline or spotlight this quarter than UFC Freedom 250 at the White House. The card, the production, the storytelling was a once-in-a-lifetime spectacle on the biggest stage possible and fans turned out and tuned in. The Ellipse Fan Fest was attended by more than 130,000 fans over 2 days. The 7-Bout Fight Card itself reached more than 34 million total viewers in reported markets, including 17 million viewers across the U.S. and Latin America on Paramount+. And this goes well beyond a single event. Since the start of the year, 20 million subscriber households have watched more than 200 million hours of UFC programming on Paramount+, delivering viewership more than 23x the average UFC pay-per-view event over the past 2 years. That's the strength of the Paramount partnership at work in just 6 short months and proof that removing the double pay wall was indeed the right decision. TKO properties' outsized impact on conversation, subscriber acquisition and retention is undeniable. Beyond the audience numbers, the event generated more than $1 billion in earned media value, the kind of exposure, only a handful of events in the world can command. It also deepened our commercial relationships, adding 25 new marketing partners to our roster, many signing multiyear or multi-event deals. Andrew will cover the events financials in more detail, but I can tell you unequivocally that our investment in this event, time, energy, focus, delivered results as designed. While we won't hold another event in the backyard of the White House, we will continue to be bold and creative on the hunt for new audiences, new venues and new experiences that make the UFC truly singular. Looking beyond our White House event, UFC sold out arenas and secured financial incentive packages around the globe, including in Perth, Macau and Newark, New Jersey, where our return to the Prudential Center became the highest grossing event in Arena history. Similarly, in Azerbaijan, our return to Baku drew more than 10,500 fans with 40% of those fans traveling in from more than 70 countries. UFC 329 in Las Vegas last month was also a standout, becoming the highest grossing event in UFC history. The same June evening that UFC returned to Baku, WWE returned to Riyadh for a successful Night of Champions, drawing a sold-out crowd of more than 18,000 fans. Building on last month's successful return to Abu Dhabi, our remaining events in the Middle East are all systems go as planned for the remainder of 2026. WrestleMania 42 drew more than 106,000 fans and one of the highest all-time gates in WWE history. WWE Backlash sold out in Tampa, Saturday Night's Main Event sold out in Fort Wayne, Indiana and WWE staged a run of successful events across Europe, spanning the U.K., Spain, France, and Portugal headlined by the aforementioned Clash in Italy, WWE's first-ever premium live events in the country. Coinciding with our local launch on Netflix, Clash sold out Turin's Inalpi Arena and set the record for the highest grossing entertainment event ever at that arena. This is a long way of saying that demand for WWE events is insatiable, and we're in the position of being at the controls of creating this demand. We have full autonomy over where we bring every event and we can be surgical in our approach to growing our fan base for the long term. Our decision-making is deliberate. SummerSlam is a prime example. Following last year's record 2-day event at MetLife Stadium, we decided to take this premium live event to Minneapolis this summer for our first-ever stadium show in the city, backed by a meaningful financial incentive package. The 2-day show was extraordinary. The sold-out corresponding WWE Fanfest delivered strong engagement metrics. Across TKO, we prioritized both the fan experience and improving profitability. They are not mutually exclusive, and they are not always in that order, which brings me to a recent chatter around WWE viewership. On Netflix, WWE Raw was a global top 10 title every single week of the second quarter. And beyond our expansion with Netflix into Italy, we recently launched premium live events with the streamer in Germany, Austria and Switzerland as markets continue to come online. With ESPN in the United States, WrestleMania Night 1 is the #1 program on ESPN2 this year, while Backlash and Clash in Italy, both had strong viewership. Meanwhile, SmackDown on USA Network was a top 3 Friday cable show in the United States among adults 18 to 49 in 9 of 13 weeks in the quarter with 3 #1 finishes. These numbers tell the real story. And I would add that TKO properties like UFC, WWE, PBR and increasingly Zuffa Boxing are purpose-built for our current social media environment. Social media amplifies our events. Shared highlights and content don't substitute for the event itself. They market the next one. Our financial incentive packages strategy is also gaining meaningful traction. Our properties deliver real economic impact in cultural connection for cities. And that value increasingly shows up in the deals we strike with tourism boards states and local municipalities and private partners. We're still early and the runway to scale this in more markets and cities across all our properties and for bigger commitments is significant. Our strategy is working and our target of $380 million to $420 million by the year 2030 is on plan. To that point, in May, we signed a landmark 3-year 7 event agreement with the Arizona Sports & Events Alliance, spanning UFC, WWE, PBR and Zuffa Boxing, one of the broadest multiproperty financial incentive package deals we put together to date. And next week, UFC 330 brings a championship bout back to the City of Brotherly Love, Philadelphia. For the first time in 15 years as part of the city's America 250th celebration, another market investing in TKO to drive economic impact. The value of our live events is undeniable, and it's only going to grow from here. As already mentioned, while AI makes content cheaper and easier to produce, what can't be manufactured becomes scarcer and more valuable. That is live communal events that people crave and organize their calendars to travel to and from. And there's no bigger example of that than the FIFA World Cup 2026. For On Location, the numbers speak for themselves. World Cup hospitality sales surpassed $2 billion from more than 568,000 packages sold through the second quarter. And that's before accounting for 25 matches in July. Demand remained exceptionally strong, straight from the group stage through to the final with significant last-minute purchasing activity across every sales channel. And this isn't only a World Cup story. On Location's portfolio of events is seeing similar anticipation and appetite, most notably the LA28 Olympics, which, while still 2 years away, has already generated orders from more than $280 million on over 20,000 bookings. The success of our hospitality and experiential program doesn't merely speak to a trend. But instead, what is quickly becoming the norm. Front-of-the-line access and the consumers' increasing desire to pay more for a personalized, customized offering. Meanwhile, the IMG business continues to partner with some of the most iconic sporting events globally. Recently, we drove sponsorship and broadcast coverage for the most watched Wimbledon since 2019 and for the Open Championship at Royal Birkdale, where IMG produced the live broadcast of every shot seen around the world across 217 territories. The range of this business is a true differentiator and these invaluable relationships deliver real commercial outcomes that compound over time across the entire TKO portfolio. At PBR, the business had an extraordinary quarter. Our Space Cowboys event at the U.S. Air Force Academy sold out and drew nearly 31,000 fans. It also aired on Fox Nation and was supported by a significant financial incentive package. This was a strong cultural moment as part of America's 250th celebration. PBR Team series is currently in full swing, and we are in active discussions with several potential investors for new franchises. Finally, turning to boxing, where we're building international scale and strengthening our roster. Zuffa Boxing staged our first international event in Bournemouth U.K., activating our new Sky Sports media partnership. Zuffa Boxing also made its New York City debut last week at Madison Square Garden's Infosys Theater. We are signing world-class talent, most notably Shakur Stevenson, one of the biggest names in American boxing. And on September 12, we will return with TKO's next super fight, featuring Ryan Garcia versus Conor Benn at T-Mobile Arena in Las Vegas, airing on Paramount+ globally and on DAZN in the U.K. and Ireland. The growth of this asset is comfortably ahead of schedule. Altogether, the second quarter was another period of disciplined, high-quality execution. Sports has become the anchor of premium media, commanding unrivaled live audiences and cultural relevance. TKO offers leverage to secular growth in live sports and entertainment, and in many ways, TKO has defensive business model characteristics to AI disruption risk. Demand for live entertainment shows no signs of slowing, and owners of differentiated IP that offer differentiated live experiences like TKO does, will be first in line to benefit. Our strategy is tight and fit for the time. Demand for live events and premium IP in the experience economy, growth in global partnerships, significant step-ups from our media deals delivering high-margin returns, momentum in financial incentive packages, over 70% of long-term contracted revenue at UFC and WWE, providing visibility and predictability, the development of Zuffa Boxing as our next significant combat sports asset and On Location's total beatdown Victory Lap with the World Cup hospitality program, not to mention the fact that the stage is well set for the L.A. Olympic Games. These are the catalysts for TKO. As I turn it over to Andrew, who will review our second quarter financial results, I would be remiss not to reiterate our commitment of returning capital to shareholders through dividends and share repurchases. Given the recent volatility and trading levels of our stock, we intend to commence an additional buyback in the near term as previously authorized by the Board. With that, Andrew?

Good afternoon. We delivered strong operating and financial results across our businesses in Q2, and we continue to execute at the highest levels on the world's biggest stages. Given our performance to date and our visibility into the remainder of the year, we have raised our full year outlook. Before getting into the numbers, I want to remind you of 2 items that had an impact on results this quarter, specifically UFC Freedom 250 and the FIFA World Cup. First, with regards to UFC Freedom 250, we incurred significantly higher-than-normal costs, which we partially offset with sold out global partnerships inventory. As a reminder, we did not sell tickets and therefore, did not record any live events revenue. Given the events financial profile, which as anticipated, resulted in approximately $30 million loss, our margins at UFC as well as on a consolidated basis, were meaningfully impacted. Second, revenue and adjusted EBITDA for the FIFA World Cup are recognized based on the volume of matches delivered and as such, will benefit both Q2 and Q3. In the second quarter, we recorded approximately $45 million of adjusted EBITDA at the IMG segment. Given the scale and complexity of this event, we're still in the process of closing out our books to determine the final financial results, but we now expect to exceed our estimate of approximately $75 million in adjusted EBITDA for the full year. Moving to our consolidated results for the second quarter. We generated revenue of $1.547 billion and adjusted EBITDA was $650 million. Our adjusted EBITDA margin was 42%. Revenue increased 18%, adjusted EBITDA increased 23% and adjusted EBITDA margin increased approximately 180 basis points as compared to the prior year. Removing the impact of UFC Freedom 250, we would have seen significantly higher total company margin expansion. In the quarter, UFC generated revenue of $536 million, an increase of 29% or $120 million. Adjusted EBITDA was $280 million, an increase of 15% or $36 million. UFC's adjusted EBITDA margin was 52%, down from 59% in the prior year period. Removing the impact of UFC Freedom 250, UFC margins would have increased meaningfully year-over-year. As previewed on our last call, UFC's event mix had a notable impact on Q2 results. UFC held 12 total events in the period, 2 numbered events and 9 fight nights plus UFC Freedom 250 compared to 11 total events in the prior period, comprised of 4 numbered events and 7 fight nights. Media Rights production and content revenue increased 25% to $325 million, driven by a step-up in media rights fees related to the Paramount deal that began in January and would have been even higher if it were not for the fact we held 1 fewer numbered event compared to 2 additional fight nights, which had an unfavorable net impact in the quarter. Partnerships and marketing revenue increased 69% to $145 million, driven by the addition of new partners and higher renewals from existing partners, largely related to UFC Freedom 250. We successfully leveraged this unique event to strengthen our relationships with existing partners, including Ram and Crypto.com and create a point of entry for new categories and partners, including Exodus, Anduril, Supersure and Starlink. Consumer Products Licensing was a bright spot, with revenue increasing 61% to $18 million. We're seeing improved royalties from our main licensees, a direct correlation to the strength of the UFC brand. We also released EA Sports UFC 6 on June 19, delivering by far our strongest launch in franchise history across all financial and engagement metrics. As expected, live events and hospitality revenue decreased 18% to $48 million due to the mix of events and venues, most notably the absence of ticket sales for UFC Freedom 250 and 1 fewer numbered event. Despite the decline in the quarter, we continue to see strong demand for our recent events, including record gates for both UFC 328 at the Prudential Center in Newark, and UFC 329 at T-Mobile Arena in Las Vegas. With respect to financial incentive packages, we are successfully executing on our strategy. We are leaning in and laser-focused on generating more value for our brands from a mix of public and private funding sources domestically and abroad. The economic growth, community connection and global attention we deliver for our partners, combined with the range of UFC, WWE, PBR and Zuffa Boxing events and offerings across our portfolio, is fueling a significant increase in inbound interest, driving higher renewal rates and forging new relationships in more markets. We are pairing that inbound demand with a targeted outbound effort leveraging our reach and relationships as well as IMG and On Location's global networks to open doors in key growth markets. In the days leading up to UFC Freedom 250, we met with dozens of existing and new contacts in Washington, D.C., a clear example of how our access and the attractiveness of our events can translate into opportunity. At UFC, financial incentive packages almost doubled year-over-year. We returned to Newark and Baku, 2 locations with FIPs in the prior year quarter, where we were able to increase revenue for 2026. UFC 327 was the first time we received a significant FIP in connection with an event in Miami. Our Fight Night event in Macau was the first under a new multi-event relationship that includes a meaningful FIP, and our event in Perth included a package under a multiyear agreement. Adjusted EBITDA reflected the increase in revenue, partially offset by an increase in expenses. Direct operating expenses primarily reflected an increase in athlete, production and other event-related costs, most notably driven by UFC Freedom 250. SG&A increased primarily due to higher personnel and travel costs compared to the prior period. Our WWE segment generated revenue of $621 million in the quarter, an increase of 12% or $65 million. Adjusted EBITDA was $368 million, an increase of 12% or $39 million. Adjusted EBITDA margin was 59% on par with the prior year period. As with UFC, WWE's event mix impacted results in Q2. We held 22 international events in the period, including a European tour and the Clash in Italy PLE in Turin compared to 2 international events in the prior year period. Going into the year, we scheduled additional international events overall and staged significantly more in Q2 as part of a strategy to deepen and broaden our global fan base, grow international partnerships revenue that has historically lagged our domestic events and strengthen our pipeline of financial incentive packages outside the U.S. On partnerships, we believe there's immediate opportunity to grow WWE's international portfolio. The next leg up will be a function of, amongst other things, us leaning in further with Netflix, where all our content sits internationally, leveraging our collective expertise, inventory and relationships to maximize value from fully integrated broadcast and in-venue packages. We are opening doors for each other and with the support of IMG's global network, expanding our pipeline of prospective partners around the world. Although international events currently come with a higher cost profile, we view that spend as a strategic investment with attractive long-term potential. Media rights production and content revenue increased 29% to $360 million primarily reflecting higher media rights fees related to the ESPN agreement that began last September. Consumer products licensing and other revenue increased 38% to $46 million, driven by higher royalties for trading cards and other collectibles compared to the prior year period. While a relatively modest portion of our overall business, we continue to make progress in this growing area at both UFC and WWE and in no small part due to our recent multi-property deal with Fanatics. Partnerships and marketing revenue increased 8% to $63 million, driven by new partnerships and renewals across multiple categories. The most notable driver of these results, WrestleMania 42, featured a record 32 partners, including Snickers, 2K, Riyadh Season, Ram and DoorDash, among others. As we saw in Q1, this growth came despite the additional international events. Live events and hospitality revenue decreased 18% to $152 million, almost exclusively related to a decrease in ticket sales for WrestleMania 42 compared to the prior year period. Adjusted EBITDA reflected the increase in revenue, partially offset by an increase in expenses. Direct operating expenses increased primarily due to higher talent, production and other event-related costs and SG&A increased primarily due to higher travel costs. Both of these increases were a result of the additional international events. Despite the incremental spend, we expect WWE margins will increase meaningfully for the full year. Shifting now to our IMG segment. We generated revenue of $355 million, an increase of 16% or $48 million. Adjusted EBITDA was $79 million, an increase of 171% or $50 million. Adjusted EBITDA margin was 22%, up from 9% in the prior year period. As we previewed on our last call, the increase in revenue primarily related to the favorable impact of World Cup hospitality sales at On Location. Revenue at the IMG business decreased slightly over the prior year period due to the expiration of certain deals, most notably a contract for Italy's premier professional cycling event. The decrease was partially offset by increased demand for Stars on Ice, the touring figure skating show, which benefited from heightened consumer enthusiasm coming off the Milano Cortina Olympics and growth in Sport 24, our owned live sports channel for airlines and cruise ships. Adjusted EBITDA primarily reflected the increase in revenue as expenses were essentially flat compared to the prior year. Corporate and Other generated revenue of $49 million, an increase of 9%. Adjusted EBITDA was negative $77 million, essentially flat with the prior year period. The increase in revenue was primarily driven by higher management fees related to our boxing initiatives. As well as higher live events and partnerships revenue at PBR, driven by our Space Cowboy event held at the U.S. Air Force Academy, which included a sizable FIP. Adjusted EBITDA reflected the increase in revenue, offset by an increase in expenses, primarily due to higher personnel and other operating costs. Now moving on to our capital structure. In the second quarter, we generated $350 million of free cash flow. Our free cash flow conversion of adjusted EBITDA was 54%. Free cash flow included the favorable impact of $22 million of net collections related to On Location for the FIFA World Cup. Free cash flow also included the unfavorable working capital impact of UFC's new media rights deal with Paramount. Turning to capital allocation. As Mark noted, maintaining a robust and sustained capital return program remains a top priority. Year-to-date, we've returned in excess of $1.3 billion of capital to equity holders through our dividends and share repurchases. On June 30, we made our Q2 cash dividend payment from TKO OpCo of approximately $150 million or $0.79 per share. We intend to continue to fund quarterly cash dividends with cash flow from operations or cash on hand. Regarding share repurchases, as we previously disclosed, on June 30, we completed our most recent ASR agreement to repurchase $800 million or approximately 4.2 million shares of our Class A common stock. In May, we commenced repurchases under a 10b5-1 trading plan for up to $200 million of our Class A common stock. We completed the program in July and in the aggregate, we purchased an additional 1 million shares under the plan. Currently, we have just over $1 billion available under our previously authorized repurchase program. As disclosed in our earnings release, we intend to commence additional buybacks under our existing program in the near future. Given the strength of our balance sheet and what we believe to be a dislocation in our stock price relative to its intrinsic value, we continue to view this as a highly value-accretive opportunity. We ended the quarter with $4.659 billion in debt and $593 million in cash and cash equivalents in addition to $960 million of restricted cash. As of the end of Q2, Net leverage was 2.2x based on net debt of $4.067 billion and LTM adjusted EBITDA of $1.841 billion. Now turning to our outlook. As you've heard us say on prior earnings calls, we manage the business with a focus on full year performance. Therefore, we believe the results are best evaluated on a full year basis, given the quarterly fluctuations that are inherent in our operations, most notably related to the timing of our live events and the mix of locations, venues and cards. As announced in our press release, we are raising our full year 2026 guidance for revenue and adjusted EBITDA. We are now targeting revenue of $5.775 billion, to $5.825 billion and adjusted EBITDA of $2.275 billion to $2.305 billion, representing an increase of $75 million and $25 million, respectively, at the midpoint of the ranges as compared to the prior guidance issued in February. The increase is based on strong operating performance across our businesses for the first 6 months of the year and our anticipated performance for the remainder of the year. Regarding our event calendar and cadence, we continue to closely monitor developments in and around the Middle East with regard to potential implications on our business. Year-to-date, we've successfully staged every event we originally planned, including 2 events on June 27, WWE Night of Champions in Saudi Arabia and a UFC Fight Night in Azerbaijan as well as a UFC Fight Night in Abu Dhabi just 9 days ago on July 25. And as Mark noted, we're moving forward with our remaining events in the region, including a WWE PLE and a UFC numbered event. With respect to UFC, the Paramount era has allowed us to level set and benchmark our athlete pay without diluting our margins. Having said that, our business catalysts, media rights, global partnerships, live events and FIPs and consumer products licensing, all significantly high-growth, high-margin contributing verticals have and will enable us to absorb the incremental costs while still meaningfully enhancing our margin profile in 2026 and beyond. Consistent with our prior calls, while we are not providing quarterly guidance, we want to highlight a few notable items as we look to the third quarter. At UFC, media rights revenue will continue to reflect the step-up from the Paramount rights deal. The mix of live events in the quarter will also favorably impact results. We expect to stage 12 events in Q3 '26 and 3 numbered events and 9 Fight Nights. This compares to 10 events in the prior period, which included 2 numbered events and 8 Fight Nights. With respect to FIPs, the Fight Night held in Abu Dhabi carried a meaningful incentive package, as did a similar event we hosted in the market in Q3 of last year. The Fight Night held this past weekend in Belgrade and UFC 330, which will take place in Philadelphia on August 15, also carry significant FIPs. At WWE, the timing of live events in the quarter will negatively impact our results. Q3 has one premium live event, SummerSlam compared to 4 in the prior period. Media rights will continue to reflect the step-up for the ESPN rights deal, but the decrease in total nights of PLE programming will impact results. Live Events and Partnerships revenue will also reflect the decrease in events as well as production costs and other event-related expenses. At the IMG segment, we expect results will reflect the continued benefit of On Location's World Cup hospitality program as well as the positive impact of a number of IMG's signature tennis and golf events, including the U.S. Open, Wimbledon and the British Open. These benefits will be partially offset by continued spend in support of our ongoing sales efforts for LA28. At Corporate and Other, we expect our results to reflect the contribution from the Garcia-Benn boxing match on September 12. As a reminder, we provided services for the Canelo-Crawford match in the prior year period. So we expect the impact of our boxing initiatives to be relatively comparable. In terms of free cash flow, while we have not given formal guidance, we continue to target a free cash flow conversion rate in excess of 60% and normalizing for the impact of net payments related to the World Cup and UFC's rights deal with Paramount. In conclusion, we generated strong results in the first half of the year, underscoring the momentum across our businesses. As we turn to the second half, we remain focused on disciplined execution and continuing our robust capital return program. Our confidence in the path ahead is grounded in the fundamentals of this business, world-class IP deeply engaged global audiences, diverse and recurring revenue streams and significant runway for growth. With that, I'll turn it back to Seth.

Thanks, Andrew. Operator, we're ready to open the call for questions.

[Operator Instructions] your first question comes from the line of Brandon Ross with LightShed.

I'd hate to lead off talking about other companies, but there's a few things that have seemed to pop into investor focus recently. On the first one, PFL hasn't really materialized into any kind of threat following the hoopla around the Saudi investment a few years ago. But now they're joining with Jake Paul and MVP and I guess the relationship they have with Netflix, how do you believe that combo can impact your business? And how seriously do you take them as a competitor?

Thanks, Brandon. Look, I would say that clearly, on an individual stand-alone basis, these promotions, both MVP and PFL were not necessarily sustainable. Now they've come together and we'll see what they can conjure up. What we know is, the competition's always made us stronger and a rising tide lifts all boats.

Okay. And I know you keep saying that 2026 has been the year of execution for you, and you've continuously pointed out you don't anticipate any major M&A, but potential deals like a combo with Formula 1 have come into investor dialogue once again and probably impacted both your stock prices. Are you open to bigger M&A as you turn the page to 2027? Or do investors just have this wrong?

Look, as we said in our prepared remarks, as we've said quarter after quarter, as you just said, we are 100% focused on execution. And if we continue doing just that effectively TKO will remain a beat and raise story. We are not hunting for M&A of any kind. There are absolutely no conversations with F1, anybody else for that matter. And there's absolutely nothing on the horizon that would take our eye off the ball from our execution story. Anyone spreading that is just flat out lying. And anyone speculating that is just flat out seeing ghosts.

Your next question comes from the line of Stephen Laszczyk with Goldman Sachs.

Mark, you spoke a lot to the strong engagement trends you saw in the quarter from the UFC and WWE. I would be curious if you could speak a little bit more looking ahead to how you keep engagement growing from here, how you're thinking about things like balancing international engagement versus protecting the engagement in your core markets? And then ultimately, where if anywhere across the league, do you think there might be an opportunity to make investments to realize some of these engagement goals?

Yes. Look, Stephen, I would just tell you that we are as focused on engagement as we are on reach. And that's the name of the game. I mean, that is the equation, if you will, right? The catalyst for our company is Andrew and I both laid out are simple. They're identifiable, they're easier to model than most. There are no hidden recipes when it comes to TKO. We're about event ticket sales and optimization. We've got a strong guide on global partnerships, $1.2 billion by 2030. We've got a strong guide on financial incentive packages $380 million to $420 million by 2030. Both of those are on good solid ground with some strong secular tailwinds behind them. Our media deals are locked in at approximately $15 billion of aggregate value for the next 5 to 7 years. Our next major combat sports asset, Zuffa Boxing is not just underway. It's ahead of plan. I'm sure you're reading each and every day about different fighters that are signing up under the Zuffa boxing banner. We're prudent when it comes to M&A. And as you just heard me say, there's nothing on the horizon, and we're not hunting for anything. We're highly cash flow generative, and we have a management team and a Board that's laser-focused on returning capital to shareholders. So when you're focusing on the business at hand, you are constantly looking at how you improve the overall fan experience, how you best position your brand for domestic and international growth, to your point. You focus on audience growth and how you bring more people under the tent with singular big eye-catching events that generate significant conversation. And at the same time, you also look at what's best from an investment standpoint for our shareholders. That's what we do. And I would tell you that we believe our value proposition is second to none. And if we keep doing our jobs right, that balance is going to -- that pendulum is going to swing a little bit, whereby -- let's take SummerSlam as an example this past weekend in Minneapolis. And I know it's not in the quarter, but I think it's an apropos point here. Look, we could have done SummerSlam on 1 night and likely had a higher ticket per cap. But in looking at that event, we chose 2 days because we thought it would be an overall better fan experience. We thought it would be a better viewing experience on ESPN, we thought we would get more marketing for our brand on ESPN. We thought it was important to go back to the Midwest that outside of Elimination Chamber last year in Chicago, we really haven't been doing enough of our PLEs in the Midwest. So as I said in my prepared remarks, it's not always about the actual bottom line, right? We prioritize the fan experience and improving profitability. They're not mutually exclusive, and they're not always in that order. And if we get the equation right, we're growing globally, which is certainly important to us and to Netflix, and if we get that right, we're driving viewership and global partnerships and financial incentive packages here domestically at home.

And then if I could, just on the guidance increase for Andrew, I'd be curious if there was any more detail you could provide around the drivers of that increase. It sounds like the World Cup performed better than expected so far in the second quarter. But as you look out, any other parts of the business that are either performing better or worse than expected?

Yes. Look, I think the increase is not necessarily a result of any one specific item. So I don't want to over index on the World Cup, even though we had a strong contribution in Q2. Obviously, there'll be Q3 contribution, and it will be above our prior announced expectations for the World Cup. But it really reflects the overall strength in our business especially UFC, which is firing on all cylinders now and a number of moving pieces. So nothing in particular to call out, but I do want to make sure that it's not an over-index on World Cup.

Stephen, I would also just add, our On Location is just like IMG, such an important part of the overall life cycle we have here in the equation. We talked about it in the prepared remarks, but you're just seeing so many more personalized experiences, customized experiences, front-of-the-line access, parents wanting it from their kids individuals wanting to go out with their friends. These communal events experiencing them in different unique ways. And while that margin, although we benefited from it this quarter, isn't up to speed or up to snuff with where WWE or UFC sits, it's still such an important element for the growth of those 2 leagues let alone as a stand-alone business in our location itself.

Your next question comes from the line of David Karnovsky with JPMorgan.

Mark, it'd be great to get your latest read in the sports rights landscape. I know you're inter-cycle but there's a lot in the pipeline for now until 2 years out when you might bring SmackDown or NXT to the market. So just how are you thinking about things? And is there any optionality on your end to accelerate discussions?

We have no plans to accelerate any conversations on our end. We were very well positioned with long-term deals, recurring revenue, locked-in escalators and very motivated marketing partners. So we're grateful to be there. And we're, of course, paying attention to all that's on the horizon, whether that's World Cup or Major League soccer or the NFL, obviously, the NHL. I mean there's a lot in the queue, and we will -- we are kind of there to support and drive as it relates to the IMG business, and they're seeing that business quite frothy at the moment. And I think it does come back to the fact that sports are just in a category, all to itself right now. I mean it truly is live experiences, unpredictable outcomes, passionate fan bases, historically strong, passionate fan bases and terrific engagement even in games that aren't always so close. And once again, the World Cup was front and center demonstrating all of that. Just an unqualified success for FIFA. Obviously, we played a small part in that with On Location. And I think the women's World Cup is going to be just as strong from an attention setting standpoint. So we're sitting in a good place right now across all fronts, Zuffa Boxing and PBR included, and we will continue to drive the market as it relates to our leadership position globally with IMG.

And then maybe just one on WWE International. You noted scheduling more tours there. The opportunity with events and sponsorship, especially as Netflix rolls to more regions I guess, Andrew called out small sets though, with cost and domestic sponsorship. So maybe can you just speak a bit about the opportunity and kind of how you consider the mix of factors.

Look, we're a global brand. And we're not going to shy away of bringing our product internationally because it doesn't have the most accretive near-term financial impact. We're going to make investments for the long term. And in doing so, we're going to take our properties, whether it be UFC, WWE, PBR or any IP in our portfolio to strategic locations to set and position ourselves up for long-term growth. Look, as it relates to partnerships at WWE, we do believe, as I said, there is a leg-up opportunity internationally as we get deeper with Netflix who as you know, has a license to all of our content internationally, where they have media and they're rolling out dynamic ad insertion, but also value sort of coveted in-venue and in-arena inventory. So our ability to go to market together, us opening up our Rolodex, them opening up their Rolodex, that doesn't happen overnight, but it's certainly something that we're bullish about later this year into 2027.

Your next call comes from the line of Ryan Gravett with UBS.

Andrew, I appreciate the detail on the EBITDA impact from Freedom -- the Freedom 250 event this quarter. But curious how you see the opportunity on translating some of the onetime uplift you saw on the partnership revenue side in the quarter into broader and more comprehensive deals going forward. And then not looking for guidance at this point, but is there anything you would flag to us on free cash flow conversion in 2027, particularly as it relates to On Location or the UFC rights deals?

Look, on UFC Freedom 250, I will reiterate, we came in exactly as anticipated or close enough for government work with a loss of approximately $30 million. And we've held true to what that level of overall loss/investment was going to be. Hats off to our global partnership team, who utilize this one-on-one event as an entry point for new partners to level up existing partners and to introduce folks to the power of our IP and what we can do from an execution perspective. There are a significant amount of new partners that impact not only 2026. We did do, I think Mark alluded to in his prepared remarks, as did I, meaningful multiyear deals. So this just wasn't just buy UFC Freedom 250 and get the spectacle. We did use this to leverage this event and its value to sign up partners that impact '26, '27 and in some cases, '28 and beyond. So we feel really good about our positioning going into next year. As it relates to free cash flow conversion, all I'll say at this point in time, we don't give forward year guidance. We do anticipate being in excess of 60% on a normalized basis for those normalizing factors I called out in my prepared remarks. And we do believe there is meaningful room for a step up in free cash flow conversion in '27 and '28 and beyond.

Your next call comes from the line of Brent Navon with Bank of America.

Just wanted to go to WWE Live Events. It seems like this quarter was impacted by WrestleMania in particular. Can you just help maybe distinguish or quantify the factors that were specific to this year's event versus what you're seeing in the broader live events business? And does this outcome possibly make you reevaluate the elements of your live event strategy going forward?

WWE Live Events, again, was almost exclusively impacted as I stated in my prepared remarks, by WrestleMania 42 versus WrestleMania 41. We did, however, in the quarter as well, stage more events, more international events as well, 22 versus 2 in the prior year quarter. Again, this is an investment, as I articulated in the last answer, in WWE and broadening and growing its fan base. So this is deliberate. Just like going back to Vegas for a second year for Wrestlemania was deliberate. WrestleMania's live event revenue for '26 despite being lower than '25, was still one of the largest box offices in the history of WWE, and we earned a meaningful financial incentive package to go back to the state of Nevada. So those economics comparable to the prior year or lesser to the prior year, but still extraordinarily beneficial to the company. Look, we increasingly view our events not just as live events, but as media events that drive viewership and fan engagement across social and help us monetize our most valuable assets. So as long as we believe going to a certain location is going to check those boxes, we're going to make those strategic investments in the long term.

And just maybe as a follow-up. I mean, it seems like historically, some of your highest profile events, whether Freedom 250, the Sphere event a few years ago or even bringing back Conor, you've generated a lot of interest and engagement around the UFC product. I guess, why not be more aggressive in investing behind these tentpole events if it drives that audience growth engagement and ultimately longer-term value and possibly even expanding that to the WWE ecosystem as well.

Look, I think you heard us say in the prepared comments that we will be hunting for new opportunities, unique experiences, seminal venues in various regions of the world that help us garner that same kind of buzz and attention. So it's not that we're not doing it. It's that -- they take a while to put together, and there's a lot of parties and negotiations and calendars and dates and venue deals not to mention clients from all walks, meaning global partners versus obviously, the platforms in which we air. I mean, there's a lot of factors that go into putting the calendar together. But yes, I would remind you that when we did the Sphere, everyone was afraid that this once-in-a-lifetime spectacle was going to be a financial loser for us. It wasn't. Then when we did UFC Freedom 250, we -- despite telling everyone we were going to lose $30 million and to record-setting numbers in terms of earned media. Nonetheless, I kept reading about the fact that they're probably going to lose more than they say and we did it. Conor was just at 329. I mean that's just a numbered event. That wasn't anything different from what we do week-to-week albeit that he hadn't fought in such a long time, so there was great demand in having a chance to see him come back to the stage. Look, we say what we mean and we mean what we say. And we are in the business of putting on the best of the best live events and experiences. And we're sitting in a marketplace that whether it's FIFA World Cup or Bruno Mars back on tour or Odyssey or Spider-Man, experiences show no sign of slowing down. It's a permanent way of the world, and TKO today sits front and center with WWE, UFC, PBR and On Location. And we will continue to take those secular tailwinds and milk them for everything they are.

Operator, let's take one last question, please.

Your final question comes from the line of Vikram Kesavabhotla with Baird.

I wanted to ask about Zuffa Boxing. You mentioned in your remarks that the progress has been comfortably ahead of your schedule. As we look ahead, can you talk about your biggest priorities for this business throughout the rest of this year and what we should be looking for in monitoring your progress? And you also referenced the recent events in the U.K. and New York City. What is the initial reception been like as you've started to expand outside of Nevada? And how do you plan to manage the mix of locations for that going forward?

Yes. Look, I would tell you that and Andrew can remind everybody of the financial arrangement we have with the JV in just a second. But overall, it's a lot of rinse and repeat. In terms of what we're doing with our other assets and properties across TKO, right? We're taking it out to London and New York City because we're trying to -- we're efforting to bring more awareness to what it is that we've launched, namely the fighters. And we're on the hunt to create more one-of-a-kind experiences that also feel the added benefit of bringing in more global partnerships, more marketing from our current media partner, more financial incentive packages that we can tie into multi-event, meaning multi-property type deals with various cities and regions. And of course, ultimately, that will trigger consumer products and licensing as Zuffa Boxing grows. But look, it's early days. Right now, it's about signing up more fighters, expanding our dug out, creating more opportunities and incentives for the fighters themselves and staging best-in-class fights and best-in-class fight cards. And if that continues to garner traction and momentum in the way that it has in such an accelerated way, we'll be well on our way to creating that next massive combat sports asset for TKO and our shareholders. Financially, of course, it's already a winning proposition for both the fighters and also the business. But of course, we don't consolidate. I'll allow Andrew to -- or ask Andrew, not just allow you. I'll actually ask you to remind everybody the JV that we have.

I accept. Look, Vik, you've heard us say this on numerous calls. We like the structure of the JV. We take calculated and intelligent risks. This is low risk, but allows us to have our fingerprints on a third combat sports vertical with a path for meaningful equity ownership that will ultimately enhance our firm value. We're here to build something, but we have no funding obligations, and we don't take financial risk. It's really opportunity cost of time and materials. And what you see so far is a product that's ahead of schedule and that energy and focus is paying off. As I said, the JV allows us to earn equity ownership, and I can't stress this enough, participate in future value creation. And that's the JV. Now somewhat tethered and associated to the JV is our ability to participate in stage, work with, promote, sell the media rights for super fights which we get paid a fee, depending upon the level of services that we ultimately provide. So that is implicit in our guide. You hear Mark talk about the Garcia event that's happening on the 12th of September and other events that were associated with that would get a fee that appears in our corporate line item outside of the nonconsolidating joint venture. So a lot of ways to win here, but it's early days.

And look, our reputation is that we know how to stage big events. We know how to build properties and assets like this. We know how to create attention and set the stage for these fighters, and Dana White has a reputation of always putting fighters and fans first. So one of the reasons our plan has accelerated the way it has is because fighters want to fight underneath a business being run by Dana White.

At this time, thank you, everyone, for joining us on today's call. Operator, you can conclude the call.

Thank you. This concludes today's call. Thank you for attending. You may now disconnect.