TKO (TKO) Q2 2025: WWE Revenue Jumps 22% as Multi-Platform Rights Strategy Drives Margin Expansion
TKO delivered a transformative Q2, underpinned by record WWE revenue and a multi-year ESPN rights deal that cements high-margin, recurring revenue and unlocks new monetization levers. The company’s focus on cross-property partnerships and live event economics continues to accelerate margin expansion across UFC, WWE, and emerging platforms. With guidance raised for the second consecutive quarter and incremental upside from boxing and global partnerships, TKO’s model is increasingly defined by contractual visibility and platform-agnostic content value.
Summary
- WWE Monetization Leverage: Retained non-PLE rights and ad inventory enable new revenue streams beyond the ESPN deal.
- Margin Expansion Momentum: High-margin live events and partnership growth are driving sustainable profitability across UFC and WWE.
- Rights Renewal Tailwinds: Upcoming UFC and boxing media rights renewals set up incremental upside for 2026 and beyond.
Performance Analysis
TKO’s Q2 results showcased robust top-line growth and operating leverage, with consolidated revenue up 10% and adjusted EBITDA margin expanding to 40% from 25%. WWE delivered a standout quarter, posting a 22% revenue increase and 59% segment margin, driven by premium live events (PLEs), higher site fees, and a surge in partnership revenue. The segment’s outperformance was attributed to record-breaking events like WrestleMania 41 and the Money in the Bank, both of which set new benchmarks for ticket sales and sponsor integration. UFC also posted record quarterly revenue and margin, fueled by double-digit growth in brand partnerships and strong live event economics, despite a modest decline in hospitality revenue due to event mix and timing.
IMG, the global sports production arm, saw a 4% revenue decline due to the loss of FA Cup rights, but segment EBITDA swung positive on lower expenses and new deals like the Saudi Pro League. Corporate and other segments improved losses on lower allocations post-acquisition. Free cash flow conversion remained strong at 71% of adjusted EBITDA, even after absorbing the final UFC antitrust settlement payment, and the company ended the quarter with $535 million in cash and $2.8 billion in debt. The $2 billion share repurchase program is set to commence in Q3, signaling confidence in future cash generation.
- WWE Partnership Upside: Q2 partnership revenue more than doubled YoY, driven by a record 28 sponsors at WrestleMania and expansion into new verticals.
- UFC Site Fee Strategy: Six of eight UFC live events in Q2 benefited from host city incentives, bolstering event-level profitability.
- IMG Cost Reset: The absence of prior-year write-downs and lower Olympics-related costs drove a $120 million EBITDA improvement despite flat revenues.
Overall, TKO’s business is increasingly defined by contractual revenue, platform diversity, and the ability to flex premium content across global partners and formats.
Executive Commentary
"The ESPN domestic media rights deal for WWE's premium live events announced just this morning secures a pivotal recurring revenue stream for years to come. Our live sports and entertainment content has become a key differentiator for organizations, brands, and platforms in search of audience."
Ari Emanuel, Executive Chair and Chief Executive Officer
"UFC and WWE remain core drivers of TKO. Both delivered record quarterly revenue and adjusted EBITDA. We're seeing significant strength of these businesses particularly with respect to live events and partnerships, and we continue to realize benefits to both the top and bottom line from the initiatives we've implemented since the formation of the company."
Andrew Schweimer, Chief Financial Officer
Strategic Positioning
1. Multi-Platform Rights Strategy
TKO’s rights strategy prioritizes both monetization and reach, intentionally splitting WWE premium live events (PLEs) and other content across multiple partners. The new five-year ESPN deal delivers a step-up in average annual value and includes annual escalators, while TKO retains rights to NXT PLEs, original programming, and content archives for further monetization. Management highlighted the value of keeping “eggs in multiple baskets,” allowing for ad inventory sales and incremental partnership revenue streams that were not available in the previous Peacock deal.
2. Partnership and Sponsorship Engine
Both UFC and WWE are leveraging cross-property partnerships and integrated sponsorships to unlock new revenue verticals. Q2 saw UFC partnership revenue rise 39% and WWE’s surge 136%, with record-setting deals at flagship events. The global partnerships group is targeting $375 million in annual revenue across both properties, with in-arena, broadcast, and digital inventory increasingly sold as bundled offerings. The expansion of the Wingstop deal to both UFC and WWE exemplifies this cross-brand synergy.
3. Live Event Economics and Site Fee Model
Live event profitability is being structurally enhanced through site fee strategies and a focus on high-value events. UFC’s model of securing host city incentives is gaining traction, with international expansion (e.g., Baku, Doha) unlocking new site fee revenue. WWE’s decision to host fewer non-televised events has increased average ticket prices and site fee payments, while landmark events like SummerSlam and WrestleMania continue to set new attendance and ticket sales records.
4. Margin Accretion and Operational Synergy
Margin expansion is a central pillar, with both WWE and UFC now delivering segment margins at or above 59%. Cost discipline, event mix optimization, and integration of acquired assets like IMG and On Location are driving operating leverage. Management has achieved its 2025 synergy targets ahead of schedule and is on pace to deliver a $40 million run-rate by year-end 2026.
5. Boxing and Future Growth Platforms
Boxing is positioned as TKO’s fourth tentpole asset, with a new JV (Zufa Boxing) and super-fight promotion model that carries minimal risk but high-margin fee income. The company receives management and promotional fees, with further upside from media rights and hospitality packages. Pending legislative changes (Muhammad Ali Act reform) could unlock additional structural opportunities in the category.
Key Considerations
TKO’s Q2 demonstrated the scalability of its premium content model, with contractual revenue and margin leverage increasingly central to its investment case. The company’s approach to rights renewals, cross-property monetization, and disciplined capital allocation will shape its trajectory as a sports and entertainment pure play.
Key Considerations:
- Rights Diversification Payoff: Retaining non-PLE WWE rights and ad inventory positions TKO for incremental, high-margin revenue beyond the new ESPN agreement.
- Partnership Velocity: The global partnerships group is scaling rapidly, with UFC nearing $300 million in annual partnership revenue and WWE now a “blank canvas” for sponsor integration.
- Event Mix Optimization: Strategic reduction in lower-yield events and focus on tentpole experiences is driving higher average ticket prices and site fee revenue.
- Synergy Realization: Early achievement of cost synergy goals at IMG and On Location supports ongoing margin accretion and free cash flow conversion.
- Boxing as Growth Catalyst: Low-risk, fee-driven boxing initiatives are set to become a recurring, high-margin contributor starting in 2026.
Risks
TKO’s model is exposed to the timing and mix of major live events, with quarterly results fluctuating based on event cadence and site fee realization. Rights renewal cycles, particularly for UFC, carry execution risk, and the transition of WWE PLEs to ESPN DTC introduces potential adoption friction given higher standalone pricing. Regulatory changes in boxing and evolving partner strategies (e.g., Netflix, ESPN) could reshape future revenue streams. Management’s margin targets rely on continued site fee momentum and partnership expansion, areas that may face competitive or macroeconomic headwinds.
Forward Outlook
For Q3 2025, TKO expects:
- UFC to stage 10 events, with two numbered events (vs. three prior year) and eight with live audiences.
- WWE to benefit from two-night SummerSlam, boosting media rights and partnership revenue, while SmackDown reverts to two hours, reducing quarterly media rights revenue.
For full-year 2025, management raised guidance:
- Revenue of $4.63 to $4.69 billion and adjusted EBITDA of $1.54 to $1.56 billion (midpoint raised $135 million and $40 million, respectively).
Management highlighted continued operating strength in UFC and WWE, ongoing synergy realization, and the planned initiation of the $2 billion share repurchase program in Q3 as key drivers for the remainder of the year.
- Site fee and partnership trends are expected to remain robust.
- Boxing and cross-property sponsorships are positioned as incremental upside for 2026.
Takeaways
TKO’s Q2 performance validates the structural advantages of its premium content model, with rights diversification, partnership velocity, and event economics driving sustainable margin expansion.
- Rights Strategy as Value Lever: The ESPN deal, combined with retained non-PLE rights, sets up a multi-year runway for recurring, high-margin revenue and further monetization.
- Margin Expansion Is Durable: Both WWE and UFC are now operating at margins above 59%, with cost discipline and synergy realization supporting long-term profitability.
- Upcoming Catalysts: UFC rights renewal, boxing JV launch, and continued partnership growth are positioned to drive incremental upside through 2026 and beyond.
Conclusion
TKO’s Q2 2025 results underscore a business model increasingly defined by platform-agnostic content, partnership monetization, and contractual revenue visibility. With margin expansion and new growth vectors in play, the company is well-positioned to capitalize on the evolving global sports and entertainment landscape.
Industry Read-Through
The TKO quarter offers a clear read-through for the broader sports media and live event sectors: As media rights fragment and platforms compete for big-event content, diversified rights strategies and cross-platform monetization are becoming the new standard. The successful integration of sponsorship, site fee economics, and direct-to-consumer distribution highlights the playbook for maximizing IP value in a shifting media landscape. Other sports, entertainment, and live event operators should note the growing importance of contractual revenue, partnership integration, and operational flexibility as core business model pillars.