SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2024

SEGMENT INFORMATION [Abstract]

SEGMENT INFORMATION

18. SEGMENT INFORMATION

Prior to the acquisition of WWE, the Company operated as a single reportable segment. Subsequent to the acquisition of WWE and effective September 12, 2023, the Company identified two reportable segments: UFC and WWE, to align with how the Company’s chief operating decision maker (the “CODM”), the Chief Executive Officer, manages the businesses, evaluates financial results, and makes key operating decisions. The UFC segment consists entirely of the operations of the Company’s UFC business which was the sole reportable segment prior to the acquisition of WWE, while the WWE segment consists entirely of the operations of the WWE business acquired on September 12, 2023.

The Company also reports the results for the “Corporate” group. The Corporate group reflects operations not allocated to the UFC or WWE segments and primarily consists of general and administrative expenses. These expenses relate largely to corporate activities, including information technology, facilities, legal, human resources, finance, accounting, treasury, investor relations, corporate communications, community relations and compensation to TKO’s management and board of directors, which support both reportable segments. Corporate expenses also include service fees paid by the Company to Endeavor related to certain corporate activities as well as certain revenue generating activities under the Services Agreement.

All prior period amounts related to the segment change have been retrospectively reclassified to conform to the new presentation.

The profitability measure employed by the Company’s CODM for allocating resources and assessing operating performance is Adjusted EBITDA. The Company defines Adjusted EBITDA as net income, excluding income taxes, net interest expense, depreciation and amortization, equity-based compensation, merger and acquisition costs, certain legal costs, restructuring, severance and impairment charges, and certain other items when applicable. Adjusted EBITDA includes amortization expenses directly related to supporting the

operations of the Company’s segments, including content production asset amortization. The Company believes the presentation of Adjusted EBITDA is relevant and useful for investors because it allows investors to view the Company’s segment performance in the same manner as the Company’s CODM to evaluate segment performance and make decisions about allocating resources. Additionally, the Company believes that Adjusted EBITDA is a primary measure used by media investors, analysts and peers for comparative purposes.

The Company does not disclose assets by segment information. The Company does not provide assets by segment information to the Company’s CODM, as that information is not typically used in the determination of resource allocation and assessing business performance of each reportable segment. A significant portion of the Company’s assets following the Transactions are comprised of goodwill and intangible assets arising from the Transactions.

The following tables present summarized financial information for each of the Company’s reportable segments (in thousands):

Revenue

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
UFC	$	394,358	$	305,185	$	707,348	$	611,915
WWE		456,803		—		773,524		—
Total consolidated revenue	$	851,161	$	305,185	$	1,480,872	$	611,915

Reconciliation of segment profitability

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
UFC	$	231,897	$	188,200	$	426,980	$	374,457
WWE		251,312		—		391,525		—
Corporate		(62,246)		(14,642)		(115,382)		(28,291)
Total Adjusted EBITDA		420,963		173,558		703,123		346,166
Reconciling items:
Equity (earnings) losses of affiliates		(273)		717		(323)		980
Interest expense, net		(65,758)		(57,895)		(130,224)		(111,803)
Depreciation and amortization		(103,819)		(15,050)		(210,980)		(30,202)
Equity-based compensation expense		(24,367)		(5,789)		(54,592)		(11,584)
Merger and acquisition costs		(2,405)		(9,520)		(2,925)		(14,935)
Certain legal costs (1)		(5,992)		(46)		(351,191)		(488)
Restructuring, severance and impairment		(28,874)		—		(38,109)		—
Other adjustments		490		(535)		104		(851)
Income (loss) before income taxes and equity (earnings) losses of affiliates	$	189,965	$	85,440	$	(85,117)	$	177,283

(1)During the six months ended June 30, 2024, certain legal costs included a legal settlement related to UFC antitrust lawsuits of $335.0 million, which is included as a component of accrued liabilities in our consolidated balance sheets as of June 30, 2024 (see Note 6, Supplementary Data).