Strong demand for UFC bouts and double-digit revenue gains in its representation unit powered Endeavor Group Holdings’ second quarter earnings.
Endeavor on Monday reported revenue for the quarter ended June 30 of $1.1 billlion, in line with analysts’ estimates for the company that went public in April. Adjusted earnings before interest, taxes depreciation and amortization came improved in all three of the company’s major reporting segments.
But Endeavor’s bottom line for the quarter includes a net loss of $319.6 million. The company’s rate of cash burn slowed significantly during the quarter. Endeavor reported having $869.8 million in cash on its books at quarter’s end, compared to $880.9 million as of March 30 and $1 billion last December.
Endeavor likes what it sees for the rest of this year. The company raised its revenue target for full year 2021 to $4.8 billion to $4.85 billion, up from $4.76 billion to $4.83 billion forecast in June. Adjusted EBITDA is up to $765 million to $775 million, up from the $735 million-$745 million previously projected.
Click here to sign up for Variety’s free Media Earnings newsletter
“Despite continued challenges brought on by the pandemic, our company once again demonstrated resilience, due in large part to our global portfolio of premium assets and the creativity of our employees and partners,” said Ariel Emanuel, CEO of Endeavor. “As you look at the secular trends defining our industries – marked by the growing demand for content, the increased value of the talent and brands behind that content, and the desire of people to come together around live events and experiences – Endeavor remains firmly and uniquely positioned for a strong second half of 2021.”
Endeavor has also faced persistent scrutiny of its high debt load after years of acquisitions to build the collection of content, sports, distribution and talent-centric support services. The company used some of its IPO proceeds to pay down $600 million in debt during the quarter, taking its total leverage to $5.35 billion.
UFC was once again the standout for the company. Endeavor’s Owned Sports Properties unit saw revenue soar 70% over the COVID-19-battered environment in the year-ago quarter to hit $258.9 million. Adjusted EBITDA hit $132.3 million, more than double the year-ago quarter. Emanuel emphasized on the call that UFC has logged its best first six months of any year in its 26-year history, thanks to ticket sales and demand for its pay-per-view events held through ESPN Plus.
Given the lockdown environment a year ago, Events, Experiences and Rights unit roared back to life with $528.7 million fueled in part by the return of a full slate of European soccer matches compared to 2020. Adjusted EBITDA improved from a $42.6 million loss a year ago.
The Representation unit that houses Endeavor Content as well as the WME and IMG agencies also saw a dramatic rebound with a 70% gain in revenue to $328.2 million. Adjusted EBITDA grew 18.5% to $61.7 million.
Endeavor has started the process of shopping Endeavor Content to sell an 80% stake mandated by the settlement that Endeavor and WME reached with the Writers Guild of America in January. Presentations to prospective buyers have recently started, Endeavor president Mark Shapiro told analysts during the call.
During a conference call with Wall Street analysts, Emanuel stressed how important the core work of WME and the other boutique agencies in the unit are to keeping Endeavor at the forefront of content through its talent relationships. That direct connection between representation and agencies having ties to talent as working as production partners was the crux of the WGA’s case against allowing WME and Endeavor Content to co-exist inside the same company.
Emanuel is unbowed, even if Endeavor does have to part by WGA fiat with the lucrative scripted development and production infrastructure that Endeavor Content has been building since 2017.
“Representation is a wealth-creation vehicle and the seed-planting engine of our entire business,” Emanuel told analysts.