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Endeavor Swings to Slim Profit in First Earnings Report Since IPO

The Ari Emanuel-led company went public at $24 per share in April, and closed Wednesday at over $29 per share.

In its first quarterly earnings report since going public in April, Endeavor posted net income of $2.4 million, a significant improvement from the same quarter a year ago, when the company posted a net loss of more than $51 million. The pandemic continues to batter many of its businesses, although a strong performance from the UFC helped mitigate the damage and drive revenue.

Overall revenue in the quarter was $1.07 billion, down from $1.19 billion a year earlier.

“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,” said Endeavor CEO Ari Emanuel in a statement.


On the company’s quarterly earnings call, Emanuel touted the growth potential as the pandemic wanes and added that the industry consolidation, including WarnerMedia-Discovery and Amazon-MGM, is a net positive for the company.

“The ever-consolidating media landscape around us is testament to the enduring value of premium IP,” Emanuel said, adding that the deals are “proof points that content is in high demand and in short supply.”

Endeavor launched its IPO at the end of April, raising over half a billion dollars on top of nearly $1.7 billion in private placements. A critical part of that raise was to buy out the other shareholders in UFC, bringing the mixed martial arts company in-house. In fact, its revised IPO pitch leaned into its owned sports properties (which also include Professional Bull Riders) and other intellectual property.


Endeavor’s owned sports properties saw revenue rise by more than 22 percent year-over-year to $283.5 million, driven by UFC.

“We believe that the pandemic actually helped accelerate UFC’s move into the mainstream,” Endeavor president Mark Shapiro said on the company’s quarterly earnings call, adding that the MMA brand is the “anchor tenant” of ESPN+.

As of market close Wednesday, Endeavor stock was trading at $29.39 per share, up from $24 per share at its IPO. The company said it raised $1 billion in the IPO and private placements, after accounting for the UFC buyout and fees.

In an interview with The Hollywood Reporter the day of its IPO, Shapiro said that the company is planning “thoughtful” acquisitions that could “tuck in” to its existing lines of business.
“We are going to continue to be thoughtful but also aggressive when we see acquisition opportunities that enable our growth to accelerate,” Shapiro said, noting that the company has made 20 acquisitions over the past five years, “in any respective area, be it content, live events or experiences.”


And as the world begins to move on from the COVID-19 pandemic, the company is betting that the rest of its businesses, most critically its live events and representation businesses, can get back to normal.

Still, those business segments continue to deal with the pandemic fallout. The company’s events, experiences, and rights segment saw its revenue fall by 19 percent to $539.6 million, while representation revenue fell 15 percent to $248.9 million.

That being said, the company’s On Location experiences business scored a big deal announced Wednesday, when the International Olympic Committee named it “the exclusive service provider” for the 2024, 2026 and 2028 Olympic games. On Location will manage transportation, accommodations, hospitality, tickets and experiences for attendees and stakeholders, including the friends and family of athletes.

On Location offers similar hospitality packages for the Super Bowl and PGA Championship.

On the representation side of the business, Endeavor and Shapiro were asked about movie studios changing the windowing strategies for films.

“We are flexible with the studios, we are having these conversations up front, and they are paying for that flexibility,” Shapiro said. Emanuel added that “we are negotiating so that we get the proper economics as we go forward…that is how we will operate as we find the proper floor.”

Emanuel also said, “we continue to look for strategic M&A and organic growth,” specifically focusing on businesses that “bolt on to our existing portfolio,” while adding that “we are constantly looking for our next acquisition that is not a bolt on to our existing portfolio” but that can benefit from the company’s global scale.

Endeavor also offered forward-looking guidance, saying that it expects 2021 revenue to be between $4.76 and $4.83 billion, and that it expects to reduct its debt by $600 million in Q3 2021.

“There isn’t a trend positively impacting the sports and entertainment landscape that we aren’t benefiting from,” Emanuel said on the call. The company noted that it is expanding its sports betting business, providing programming and talent to streaming services, and exploring new technologies like NFTs in its UFC and Frieze businesses.

This article was originally published by The Hollywood Reporter.