TKO’s second guidance rise puts UFC and IMG in the spotlight

TKO Group Holdings (NYSE:TKO) raised its full-year targets for the second time this year after UFC and IMG delivered a powerful third-quarter lift, with revenue up 21% to US$1.360 billion and Adjusted EBITDA, a non-GAAP measure, up 54% to US$555.7 million. The stronger result came alongside a more consequential capital allocation decision: TKO intends to complete the remaining US$936.0 million of its existing share-repurchase authorisation, funded primarily with additional debt and cash on hand.

UFC rights revenue leads the earnings acceleration

UFC was the quarter’s main engine. Revenue rose 60% to US$519.2 million, including a US$132.3 million increase in media rights, production and content revenue. TKO attributed that lift primarily to higher rights fees under its new Skydance distribution agreement, which began in January 2026, as well as one additional Numbered Event and one additional Fight Night.

Live events and hospitality revenue also benefited from the record-setting performance of UFC 329 and two additional events. UFC Adjusted EBITDA climbed 72% to US$285.3 million, while its Adjusted EBITDA margin widened to 55% from 51%. The company said the higher event costs associated with UFC 329 and the additional events were largely matched by the increased revenue.

IMG benefits from World Cup hospitality and new deals

IMG revenue increased 16% to US$391.3 million, with Adjusted EBITDA up 89% to US$115.9 million. The strongest contributors were new marketing deals covering tennis and soccer, new distribution agreements for FIFA World Cup, tennis and soccer, and FIFA World Cup 2026 hospitality sales through On Location.

The IMG figures carry some event timing in them. TKO said the World Cup hospitality contribution was partly offset by the absence of the biennial Ryder Cup event, while costs related to the upcoming World Cup pushed up selling, general and administrative expenses. Even so, IMG’s margin rose to 30% from 18%.

WWE holds steady despite a lighter events calendar

WWE was comparatively subdued, with revenue down 1% to US$399.3 million. Live events and hospitality revenue fell US$24.8 million, reflecting the mix and timing of events, three fewer Main Roster Premium Live Events and lower SummerSlam sales. Higher media rights, partnership and consumer-product revenue partly cushioned that decline.

WWE Adjusted EBITDA nevertheless rose 5% to US$217.2 million as fewer events reduced production, talent and other event-related costs. Consolidated GAAP net income was US$277.9 million, up from US$106.8 million, although net income attributable to TKO shareholders was US$98.7 million after US$179.2 million attributable to non-controlling interests.

Higher guidance meets a debt-funded buyback plan

TKO now expects full-year 2026 revenue of US$5.790 billion to US$5.830 billion and Adjusted EBITDA of US$2.295 billion to US$2.315 billion. Its previous ranges, raised in August, were US$5.775 billion to US$5.825 billion for revenue and US$2.275 billion to US$2.305 billion for Adjusted EBITDA. The guidance assumes all planned live events take place, including events in the Middle East.

Cash generation was strong: nine-month operating cash flow reached US$1.541 billion and free cash flow, another non-GAAP measure, was US$1.474 billion. But the balance sheet is moving in the other direction. Gross debt stood at US$4.647 billion at September 30, up from US$3.762 billion at the end of 2025, while net leverage was reported at 2.0 times trailing-twelve-month Adjusted EBITDA. TKO has already returned more than US$1.6 billion to equity holders this year through buybacks, dividends and related distributions, and now proposes to keep buying shares while taking on more debt.