TKO Group (TKO) Q4 2025 earnings review
Core Engines Roar, Driving Massive 2026 Optimism
TKO closed out 2025 by confirming exactly what bulls wanted to see: the core UFC and WWE franchises are highly profitable cash machines. Q4 consolidated revenue accelerated 12% YoY to $1.038B, while Adjusted EBITDA surged 30% to $281.2M. Although the newly integrated IMG segment reversed to an operating loss, the broader narrative is dominated by explosive FY26 guidance. Management projects EBITDA will jump ~43% next year, fueled by major media rights step-ups. Armed with $1.16B in full-year Free Cash Flow, TKO announced a fresh $1B share buyback program to launch in March 2026.
🐂 Bull Case
The step-up in high-margin media rights deals is fundamentally altering TKO's profitability. WWE's Adjusted EBITDA margin jumped from 38% to 46% in Q4, and 2026 guidance implies consolidated EBITDA margins will approach 40%.
Management is not hoarding cash. With over $1.3B returned to shareholders in 2025, the new $1B buyback signals massive confidence in the sustainability of their >70% Free Cash Flow conversion.
🐻 Bear Case
The IMG and On Location acquisition looks increasingly cyclical and low-margin. Q4 revenue fell 9% and EBITDA reversed to a $3.9M loss, diluting the pristine margins of the UFC/WWE assets.
Despite $281M in Adjusted EBITDA, Q4 Net Income was a meager $0.8M. A $54M jump in D&A related to WWE intangible assets highlights the heavy non-cash burden on the balance sheet.
⚖️ Verdict: 🟢
Bullish. While the IMG segment introduces unwanted volatility, the core UFC and WWE properties are operating flawlessly. The 2026 guidance of ~43% EBITDA growth is a game-changer that validates the entire TKO merger thesis.
Key Themes
Media Rights Renewals Driving Accelerating Margins
The contractual escalation of media rights fees is the primary growth engine for TKO. In Q4, WWE's media rights revenue surged 41% YoY (+$64.9M) due to the impacts of the new Netflix and ESPN distribution agreements. UFC's media revenue also grew 12% YoY (+$24.6M). Because these are highly fixed, contracted revenues, they flow almost entirely to the bottom line, driving the structural margin expansion expected in 2026.
IMG Segment Reversing to Operating Losses
The IMG segment (IMG & On Location) is decelerating rapidly in a post-Olympics environment. Q4 revenue fell 9% to $247.7M, and Adjusted EBITDA reversed from a $16.1M profit a year ago to a $3.9M loss. Management cited the biennial timing of the Arabian Gulf Cup, but it raises questions about the standalone quality and lumpiness of these acquired businesses compared to the highly recurring UFC/WWE models.
Global Sponsorships and Marketing Expanding
Both UFC and WWE are successfully monetizing their increasingly global fan base (a key macro driver). Q4 Partnerships & Marketing revenue accelerated sharply: UFC up 39% YoY to $93.4M, and WWE up 57% YoY to $35.8M. This is a direct result of new brand partners paying premiums for access to TKO's expanding international viewership.
WWE Live Events Decelerating Due to Timing
While total WWE revenue was stellar, the Live Events & Hospitality segment was a major laggard in Q4, with revenue dropping 27% YoY to $68.3M. This deceleration was tied to a decrease in lucrative site fees and the timing of international premium live events. It highlights how sensitive the top line is to event scheduling.
Zuffa Boxing Launching as a Fourth Tentpole
The successful launch of the Zuffa Boxing joint venture in January 2026 introduces a new, high-margin product vector. Operating in the Corporate segment (which saw Q4 revenue grow 59% due in part to boxing initiatives), this represents an asset-light, fee-based business model that leverages TKO's promotional expertise without significant capital deployment.
D&A and Corporate Expenses Weighing on GAAP Profits
Despite a massive beat on Adjusted EBITDA, Q4 Net Income was virtually flat ($0.8M). This discrepancy was driven by a $54.0M surge in depreciation and amortization—specifically the accelerated expense for WWE intangible assets tied to media rights. Additionally, Q4 SG&A across the company rose by nearly $50M, indicating that the cost of supporting these global brands remains heavy.
Other KPIs
Accelerating dramatically. FCF grew $220.9M YoY, driven by strong operating performance and favorable working capital timing. For the full year 2025, FCF hit $1.158B, equating to a phenomenal 73% conversion rate from Adjusted EBITDA, enabling the new $1B buyback.
Stable. The loss is virtually flat YoY (-$92.8M in 24Q4). While PBR and boxing management fees drove a 59% revenue increase in this segment, it was entirely offset by higher personnel and operating expenses, highlighting the baseline cost of running the consolidated TKO entity.
Accelerating. Up 12% YoY from $64.6M. This was driven by an increase in lucrative site fee revenues linked to the mix of international events, proving that governments and municipalities remain eager to subsidize UFC's presence.
Guidance
Accelerating. The midpoint of $5.725B implies roughly 20.9% YoY growth over FY25's $4.735B. This massive step-up is primarily driven by the activation of the new long-term media rights agreements for both UFC and WWE.
Accelerating. The midpoint of $2.265B represents an explosive 42.9% YoY increase. This implies significant operating leverage, as the 21% projected revenue growth is dropping straight to the bottom line, likely expanding total consolidated margins closer to 40%.
Key Questions
IMG Segment Stabilization
The IMG segment saw negative EBITDA margins in Q4 due to event timing. Is this simply a low point in a biennial cycle, or are there structural cost issues within the acquired businesses that need to be addressed in 2026?
Pacing of the $1B Buyback
With the new $1B share repurchase program launching in March, how should investors think about the pacing of these purchases relative to the $3.78B gross debt load on the balance sheet?
WWE Live Event Cadence
WWE live events revenue contracted significantly in Q4 due to site fee timing. What is the expected cadence of international PLEs and associated site fees for 2026 to ensure this segment returns to growth?