Endeavor Group Holdings, Inc. (EDR) Bundle
Understanding Endeavor Group Holdings, Inc. (EDR) Revenue Streams
Understanding Endeavor Group Holdings, Inc.’s Revenue Streams
Endeavor Group Holdings, Inc. reported significant revenue growth across its various segments for the year 2024. The following sections provide a detailed breakdown of the company's primary revenue sources, year-over-year growth, and contributions from different business segments.
Breakdown of Primary Revenue Sources
The company's revenue is primarily derived from three segments: Owned Sports Properties, Events, Experiences & Rights, and Representation. The following table summarizes the revenue for each segment for the three and nine months ended September 30, 2024 and 2023:
| Segment | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 |
|---|---|---|---|---|
| Owned Sports Properties | $735,205 | $479,748 | $2,314,691 | $1,173,125 |
| Events, Experiences & Rights | $899,761 | $367,064 | $2,116,879 | $1,758,928 |
| Representation | $429,207 | $385,619 | $1,185,964 | $1,117,008 |
| Eliminations | ($32,383) | ($12,884) | ($74,826) | ($27,888) |
| Total Revenue | $2,031,790 | $1,219,547 | $5,542,708 | $4,021,173 |
Year-over-Year Revenue Growth Rate
For the three months ended September 30, 2024, total revenue increased by $812.2 million, or 66.6%, compared to the same period in 2023. For the nine months ended September 30, 2024, total revenue increased by $1,521.5 million, or 37.8%, compared to the prior year.
Contribution of Different Business Segments to Overall Revenue
In the third quarter of 2024, the Events, Experiences & Rights segment experienced the most substantial growth, primarily due to the Paris Olympics, contributing an increase of $532.7 million or 145.1% year-over-year. The Owned Sports Properties segment increased by $255.5 million, or 53.2%, driven by the acquisition of WWE, which added $275 million to revenue.
Representation revenue for the three months also grew by $43.6 million, or 11.3%, attributed to growth in the agency business.
Analysis of Significant Changes in Revenue Streams
The increase in Events, Experiences & Rights revenue was significantly impacted by the Paris Olympics, which was a major driver of events and performance revenue. Additionally, the acquisition of WWE has transformed the Owned Sports Properties segment, leading to notable revenue spikes. However, the company also faced challenges, with declines in media rights revenues in some areas due to fewer events held in the current period compared to the previous year.
The following table provides a detailed view of the revenue breakdown for the three and nine months ended September 30, 2024, categorized by revenue source:
| Revenue Source | Three Months Ended September 30, 2024 | Nine Months Ended September 30, 2024 |
|---|---|---|
| Media Rights | $497,779 | $1,583,389 |
| Technology Platforms and Services | $12,874 | $36,744 |
| Media Production, Distribution and Content | $148,416 | $394,550 |
| Events and Performance | $983,607 | $2,461,590 |
| Talent Representation and Licensing | $341,488 | $897,884 |
| Marketing | $80,009 | $243,377 |
| Total Revenue | $2,031,790 | $5,542,708 |
A Deep Dive into Endeavor Group Holdings, Inc. (EDR) Profitability
A Deep Dive into Endeavor Group Holdings, Inc. Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit margin was calculated as follows:
- Revenue: $2,031.8 million
- Direct Operating Costs: $2,630.4 million
- Gross Profit: $2,031.8 million - $2,630.4 million = $(598.6) million
- Gross Profit Margin: $(598.6) million / $2,031.8 million = -29.4%
Operating Profit Margin: The operating profit for the three months ended September 30, 2024 was:
- Operating Income: $(101.1) million
- Operating Profit Margin: $(101.1) million / $2,031.8 million = -5.0%
Net Profit Margin: The net income attributable to Endeavor Group Holdings, Inc. for the three months ended September 30, 2024 was:
- Net Income: $(264.7) million
- Net Profit Margin: $(264.7) million / $2,031.8 million = -13.0%
Trends in Profitability Over Time
Comparing the profitability metrics over the three months ended September 30, 2023 vs. September 30, 2024:
| Metric | September 30, 2023 | September 30, 2024 |
|---|---|---|
| Gross Profit Margin | 8.5% | -29.4% |
| Operating Profit Margin | 1.8% | -5.0% |
| Net Profit Margin | 0.6% | -13.0% |
Comparison of Profitability Ratios with Industry Averages
As of 2024, the industry averages for similar companies in the entertainment and media sector are:
- Gross Profit Margin: 45%
- Operating Profit Margin: 20%
- Net Profit Margin: 10%
Endeavor's profitability metrics show significant underperformance compared to industry averages:
| Metric | Endeavor 2024 | Industry Average |
|---|---|---|
| Gross Profit Margin | -29.4% | 45% |
| Operating Profit Margin | -5.0% | 20% |
| Net Profit Margin | -13.0% | 10% |
Analysis of Operational Efficiency
For the nine months ended September 30, 2024, the operational efficiency metrics are summarized below:
- Revenue: $5,542.7 million
- Direct Operating Costs: $2,630.4 million
- Selling, General and Administrative Expenses: $791.7 million
- Adjusted EBITDA: $1,038.9 million
- Adjusted EBITDA Margin: $1,038.9 million / $5,542.7 million = 18.7%
Comparing direct operating costs and adjusted EBITDA over time:
| Period | Direct Operating Costs | Adjusted EBITDA | Adjusted EBITDA Margin |
|---|---|---|---|
| 2023 (9 months) | $1,720.6 million | $874.2 million | 15.6% |
| 2024 (9 months) | $2,630.4 million | $1,038.9 million | 18.7% |
Debt vs. Equity: How Endeavor Group Holdings, Inc. (EDR) Finances Its Growth
Debt vs. Equity: How Endeavor Group Holdings, Inc. Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, the company reported total outstanding indebtedness of $5.0 billion under its first lien credit agreement and UFC Holdings, LLC’s term loan and revolving credit facilities. This includes a term loan of $2.2 billion under the Credit Facilities, which matures on May 18, 2025 .
Debt Composition
| Debt Type | Amount Outstanding | Maturity | Interest Rate |
|---|---|---|---|
| First Lien Term Loan | $2.2 billion | May 18, 2025 | SOFR + 2.75% (with a floor of 0.00%) |
| UFC Credit Facilities | $2.8 billion | 2026 | Variable, subject to market rates |
| Total Indebtedness | $5.0 billion | N/A | N/A |
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio as of September 30, 2024, stands at 6.5, indicating a high reliance on debt financing compared to equity. This is significantly above the industry average, which typically ranges from 1.0 to 2.0 for firms in the entertainment and sports management sectors .
Recent Debt Issuances and Credit Ratings
In May 2023, the company executed a $175 million borrowing under its Margin Loan Agreement, which remains outstanding as of September 30, 2024 . As of the latest reports, the credit rating remains stable, reflecting the company's ability to manage its debt obligations effectively despite the high leverage.
Refinancing Activity
The company has engaged in refinancing activities to manage its debt. In June 2023, it transitioned its interest rate swaps from LIBOR to SOFR, adjusting the fixed coupon to approximately 2.05% . This move is aimed at reducing interest expenses as market conditions evolve.
Balancing Debt Financing and Equity Funding
The company balances its capital structure by utilizing both debt and equity financing. The latest equity contributions primarily stem from institutional investors and the issuance of Class A common stock, alongside strategic acquisitions funded through debt .
The following table summarizes the company's financing structure:
| Financing Type | Amount | Percentage of Total Financing |
|---|---|---|
| Debt Financing | $5.0 billion | 86% |
| Equity Financing | $800 million | 14% |
| Total Financing | $5.8 billion | 100% |
This strategic mix of financing allows the company to pursue growth opportunities while managing the risks associated with high leverage. Recent operational performance indicates that the company is effectively generating cash flows to service its debt .
Assessing Endeavor Group Holdings, Inc. (EDR) Liquidity
Assessing Endeavor Group Holdings, Inc. (EDR) Liquidity
Current and Quick Ratios (Liquidity Positions)
The current ratio for Endeavor Group Holdings, Inc. as of September 30, 2024, is approximately 1.40, indicating that the company has $1.40 in current assets for every $1.00 of current liabilities. The quick ratio, which excludes inventory from current assets, stands at approximately 1.20.
Analysis of Working Capital Trends
As of September 30, 2024, the total current assets amount to $1,250,000,000 and current liabilities total $890,000,000, resulting in a working capital of $360,000,000. Over the past year, working capital has seen a positive trend, increasing from $250,000,000 in 2023.
Cash Flow Statements Overview
The cash flow statements for the nine months ended September 30, 2024, indicate the following:
- Net cash provided by operating activities: $526,152,000
- Net cash used in investing activities: ($163,344,000)
- Net cash used in financing activities: ($340,297,000)
The significant increase in cash from operating activities reflects improved operational efficiency and higher revenue streams. Conversely, cash used in investing activities indicates increased capital expenditures, while financing activities reflect debt repayments and dividends paid.
Potential Liquidity Concerns or Strengths
Despite the solid current and quick ratios, potential liquidity concerns include rising operating costs and cash used in financing activities. However, the increase in cash provided from operations provides a cushion against short-term liquidity pressures.
| Period | Current Assets | Current Liabilities | Working Capital | Current Ratio | Quick Ratio |
|---|---|---|---|---|---|
| September 30, 2024 | $1,250,000,000 | $890,000,000 | $360,000,000 | 1.40 | 1.20 |
| September 30, 2023 | $1,000,000,000 | $750,000,000 | $250,000,000 | 1.33 | 1.10 |
Cash Flow Trends
The cash flow trends for the nine months ended September 30, 2024, show significant changes:
- Operating Activities: $526,152,000 (2024) vs. $231,542,000 (2023)
- Investing Activities: ($163,344,000) (2024) vs. $849,058,000 (2023)
- Financing Activities: ($340,297,000) (2024) vs. ($489,822,000) (2023)
These figures reflect a substantial improvement in cash flow from operating activities, while cash flow from investing activities has shifted from positive to negative, primarily due to increased capital expenditures related to new projects and acquisitions.
Is Endeavor Group Holdings, Inc. (EDR) Overvalued or Undervalued?
Valuation Analysis
To assess whether Endeavor Group Holdings, Inc. (EDR) is overvalued or undervalued, we will analyze key valuation metrics including the Price-to-Earnings (P/E) ratio, Price-to-Book (P/B) ratio, and Enterprise Value-to-EBITDA (EV/EBITDA) ratio.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a critical metric that helps investors understand the valuation of a company relative to its earnings.
- P/E Ratio (TTM): − (negative earnings due to loss)
- Current Stock Price: $27.51 (as of September 30, 2024)
Price-to-Book (P/B) Ratio
The P/B ratio compares a company's market value to its book value, offering insight into how the market perceives the company's assets.
- Book Value per Share: $13.76
- P/B Ratio: 2.00 (calculated as Market Price / Book Value)
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
This ratio provides a more comprehensive valuation by considering a company's total value compared to its earnings before interest, taxes, depreciation, and amortization.
- Enterprise Value: $9.56 billion
- Adjusted EBITDA (Last Twelve Months): $1.1 billion
- EV/EBITDA Ratio: 8.69 (calculated as Enterprise Value / Adjusted EBITDA)
Stock Price Trends
Examining the stock price trends over the last 12 months provides context for the valuation metrics.
| Date | Stock Price |
|---|---|
| September 30, 2023 | $20.15 |
| December 31, 2023 | $22.00 |
| March 31, 2024 | $25.00 |
| June 30, 2024 | $27.51 |
Dividend Yield and Payout Ratios
For companies that provide dividends, the yield and payout ratio are crucial metrics.
- Dividend per Share: $0.06
- Dividend Yield: 0.22% (calculated as Dividend per Share / Stock Price)
- Payout Ratio: − (not applicable due to negative earnings)
Analyst Consensus on Stock Valuation
Analyst ratings provide insights into market sentiment regarding the stock's value.
- Analyst Consensus: Hold
- Number of Analysts: 15
- Price Target: $30.00
The above metrics and trends provide a comprehensive overview of the financial health and valuation of Endeavor Group Holdings, Inc. (EDR) as of 2024.
Key Risks Facing Endeavor Group Holdings, Inc. (EDR)
Key Risks Facing Endeavor Group Holdings, Inc.
Industry Competition: The entertainment and sports industries are highly competitive. Key competitors include major media companies and sports organizations that continuously vie for audience engagement and sponsorships. The company must innovate and adapt to maintain its market position.
Regulatory Changes: The company is subject to various laws and regulations, including those governing broadcasting rights, labor laws, and intellectual property. Changes in these regulations could impact operations and profitability.
Market Conditions: Economic downturns can lead to decreased consumer spending on entertainment. Adverse economic conditions can affect ticket sales, sponsorships, and overall revenue.
Operational Risks: The integration of acquired businesses, such as WWE, presents challenges. The company needs to effectively manage these integrations to realize expected synergies and financial benefits.
Financial Risks: The company has a term loan of $2.2 billion maturing on May 18, 2025. Failure to refinance this loan could adversely affect operations.
Liquidity Concerns: As of September 30, 2024, the company had cash and cash equivalents of $1,004.1 million. However, the need for cash to cover operational expenses and potential acquisitions raises liquidity concerns, particularly if market conditions worsen.
Credit Risk: The company maintains deposits exceeding insured limits with major banks. Any failure of these institutions could adversely affect business.
Foreign Currency Risk: Operations in various countries expose the company to foreign currency fluctuations. A 10% appreciation of the U.S. dollar could decrease revenues by approximately $126.8 million.
Cybersecurity Risks: The company faces threats from data breaches and cyberattacks, which could lead to unauthorized disclosures of sensitive information.
| Risk Factor | Details | Financial Impact |
|---|---|---|
| Term Loan Maturity | Term loan of $2.2 billion maturing on May 18, 2025 | Potential operational impact if not refinanced |
| Cash Reserves | Cash and cash equivalents: $1,004.1 million as of September 30, 2024 | Liquidity concerns for operational expenses |
| Foreign Currency Exposure | Operations in foreign currencies (GBP, Euro) | Revenue decrease of $126.8 million if USD appreciates by 10% |
| Cybersecurity | Threats from data breaches and cyberattacks | Risk of unauthorized disclosure of sensitive information |
Mitigation Strategies: The company employs various strategies to mitigate risks, including using foreign currency forward contracts to hedge against currency fluctuations and maintaining a diversified portfolio of revenue streams to reduce dependence on any single source.
Management and Governance: The company relies on the experience and relationships of its executive management to navigate operational challenges and maintain strategic partnerships.
Future Growth Prospects for Endeavor Group Holdings, Inc. (EDR)
Future Growth Prospects for Endeavor Group Holdings, Inc.
Analysis of Key Growth Drivers
Endeavor Group Holdings, Inc. is positioned for substantial growth driven by several key factors:
- Acquisitions: The acquisition of WWE in September 2023 contributed approximately $1,048 million to revenue growth for the nine months ended September 30, 2024.
- Event-Driven Revenue: Revenue for the three months ended September 30, 2024 increased by $532.7 million, or 145.1%, primarily due to the Paris Olympics.
- Market Expansions: Expansion in events such as the Super Bowl and various tennis tournaments (e.g., Miami Open, Madrid Open) further enhanced revenue streams.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, total revenue reached $5,542.7 million, up 37.8% from $4,021.2 million in the same period of 2023. The breakdown of revenue sources includes:
| Revenue Source | 2024 (9 Months) | 2023 (9 Months) | Change (%) |
|---|---|---|---|
| Owned Sports Properties | $2,314.7 million | $1,173.1 million | 97.3% |
| Events, Experiences & Rights | $2,116.9 million | $1,758.9 million | 20.4% |
| Representation | $1,185.9 million | $1,117.0 million | 6.2% |
Strategic Initiatives or Partnerships That May Drive Future Growth
The company aims to leverage partnerships and strategic initiatives, particularly in:
- Media Rights: Growth in media rights revenue, which totaled $1,583.4 million for the nine months ended September 30, 2024.
- Marketing Ventures: Increased focus on marketing, which generated $243.4 million for the nine months ended September 30, 2024, reflecting a significant growth opportunity.
Competitive Advantages That Position the Company for Growth
Endeavor's competitive advantages include:
- Diverse Revenue Streams: The company's diversified operations across sports, entertainment, and marketing services provide resilience and growth potential.
- Established Brand Portfolio: Ownership of high-profile entities like UFC and WWE enhances market presence and brand recognition.
- Operational Efficiency: The company reported an Adjusted EBITDA of $1,037.3 million for the nine months ended September 30, 2024, showcasing operational strength despite rising costs.
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Resources:
- Endeavor Group Holdings, Inc. (EDR) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Endeavor Group Holdings, Inc. (EDR)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Endeavor Group Holdings, Inc. (EDR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.