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Endeavor swings to US$2.4m Q1 profit

Sports and entertainment conglomerate posted US$51.3m loss for same period in 2020.

3 June 2021 Ed Dixon
  • Revenue for quarter came to US$1.07bn, down from US$1.19bn the year prior
  • Adjusted EBITDA rises to US$199.5m
  • Endeavor anticipating total revenue between US$4.76bn and US$4.83bn for 2021

Endeavor Group Holdings, the parent company of the IMG and WME agencies, posted a net income of US$2.4 million for the first quarter of 2021, representing a marked improvement on the net loss of US$51.3 million it reported for the same period last year.

Endeavor, which also owns the Ultimate Fighting Championship (UFC), saw its revenue for Q1 total US$1.07 billion, down from the US$1.19 billion it generated during the same quarter in 2020. Operating income came to US$94.5 million, compared to US$53.8 million the year prior.

Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) and adjusted net income increased to US$199.5 million and US$58.1 million, respectively, compared to US$176.2 million and US$43.8 million in Q1 2020.

Endeavor noted that much of the demand came via the company’s experiences unit, which includes premium hospitality and travel business On Location.

Earlier this week, On Location signed a deal with the International Olympic Committee (IOC), meaning it will exclusively oversee travel and hospitality experiences for Paris 2024, Milano Cortina 2026 and Los Angeles 2028. According to Sports Business Journal (SBJ), the company will pay at least US$1.3 billion for the Olympic hospitality business across the three editions of the Games.

At the segment level, Endeavor’s owned sports properties revenue increased US$51.3 million, or 22.1 per cent, year-on-year (YoY) to US$283.5 million, driven by increased event output and higher media rights and sponsorship fees for the UFC.

The segment’s adjusted EBITDA for the quarter increased US$43.3 million, or 42.3 per cent, to US$145.5 million, thanks again to the UFC’s increase in revenue. This was slightly offset by an increase in operating expenses.

Events, experiences and rights segment revenue decreased US$129.2 million, or 19.3 per cent, to US$539.6 million, primarily from the cancellation of events due to Covid-19. This was partially offset by media rights fees associated with several events that were postponed in 2020 and moved to Q1 2021.

The segment’s adjusted EBITDA for the quarter decreased US$30.1 million, or 43.5 per cent, to US$39.1 million, courtesy mainly of the Covid-19-related reduction in revenue, partially offset by a decrease in operating expenses.

Representation segment revenue decreased US$43.8 million, or 15 per cent, to US$248.9 million. In this case, Endeavor attributed the drop to the impact the pandemic had on advertising spending, as well as reduced and delayed productions and fewer content deliveries.

The segment’s adjusted EBITDA for the quarter decreased US$7.1 million, or 10.4 per cent, to US$61.5 million, primarily due to the decline in revenue, partially offset by reduced operating expenses.

Endeavor is now expecting total revenue for 2021 to be between US$4.76 billion and US$4.83 billion. The company pulled in revenue of US$3.5 billion last year. Adjusted EBITDA is set to hit between US$735 million and US$745 million. Endeavor also expects to reduce its debt, which stands at US$5.92 billion, by US$600 million in Q3 2021.

“As we emerge from the pandemic, we are witnessing strong demand for all forms of content,” said Endeavor chief executive Ariel Emanuel (pictured above). “Our company was purpose-built to fulfil this demand on a global scale – be it live events and experiences or premium on-screen content.

“While our first quarter results were still negatively impacted by Covid-19, we are well positioned to benefit from the pent-up demand for content, while maintaining our long-term focus on secular trends and high-growth areas that have been both validated and amplified by the pandemic.”

Endeavor’s Q1 financial results were released shortly after it made its debut on the New York Stock Exchange in April. Trading under the ticker symbol ‘EDR’, the company raised around US$511 million in its initial public offering (IPO) from the sale of 21.3 million shares.

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