Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the information set forth in our unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report and with our audited financial statements and related notes included in our 2023 Annual Report. The historical financial data discussed below reflects our historical results of operations and financial position and relates to periods prior to the Transactions. As a result, the following discussion does not reflect the significant impact that such events will have on us. This discussion contains forward-looking statements based upon management’s current plans, expectations and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various known and unknown factors, including those set forth under Part I, Item 1A. “Risk Factors” of our 2023 Annual Report or in other sections of the 2023 Annual Report and this Quarterly Report.

Overview

TKO is a premium sports and entertainment company which operates leading combat sports and sports entertainment brands. The Company monetizes its brands through four principal activities: Media rights and content, Live events, Sponsorship and Consumer products licensing.

TKO was formed through the combination of Zuffa Parent, LLC (n/k/a TKO Operating Company, LLC) which owns and operates the Ultimate Fighting Championship (“UFC”), a preeminent combat sports brand and a subsidiary of Endeavor Group Holdings, Inc. (“Endeavor”), a global sports and entertainment company, and World Wrestling Entertainment, Inc. (n/k/a/ World Wrestling Entertainment, LLC) (“WWE”), a renowned sports entertainment business. The Transactions unite two complementary sports and sports entertainment brands in a single company supported by Endeavor’s capabilities in premium IP ownership, talent representation, live events and experiences. For additional information regarding the terms of the Transactions, see Note 4, Acquisition of WWE, to our unaudited consolidated financial statements included in this Quarterly Report.

Segments

As of March 31, 2024, we operated our business under two reportable segments, UFC and WWE. In addition, we also report results for the “Corporate” group, which incurs expenses that are not allocated to the business segments.

UFC

The UFC segment reflects the business operations of UFC. Revenue from our UFC segment principally consists of media rights fees associated with the distribution of its programming content; ticket sales and site fees associated with the business’s global live events; sponsorships; and consumer product licensing agreements of UFC-branded products.

WWE

The WWE segment reflects the business operations of WWE. Revenue from our WWE segment principally consists of media rights fees associated with the distribution of its programming content; ticket sales and site fees associated with the business’s global live events; sponsorships; and consumer product licensing agreements of WWE-branded products.

Corporate

Corporate reflects operations not allocated to the UFC or WWE segments and primarily consists of general and administrative expenses. These expenses relate largely to corporate activities, including information technology, facilities, legal, human resources, finance, accounting, treasury, investor relations, corporate communications, community relations and compensation to TKO’s management and board of directors, which support both reportable segments. Corporate expenses also include service fees paid by the Company to Endeavor under the Services Agreement, inclusive of fees paid for revenue producing services related to the segments.

Components of Our Operating Results

Revenue

TKO primarily generates revenue via domestic and international media rights fees, ticket sales and site fees at our live events, sponsorships, and consumer products licensing.

Direct Operating Costs

TKO’s direct operating costs primarily include costs associated with our athletes and talent, production, marketing, venue costs related to our live events, and commissions and direct costs with distributors, as well as certain service fees paid to Endeavor.

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Selling, General and Administrative

TKO’s selling, general and administrative expenses primarily include personnel costs as well as rent, travel, professional service and legal costs, legal settlements and certain service fees paid to Endeavor.

Provision for Income Taxes

TKO Group Holdings, Inc. was incorporated as a Delaware corporation in March 2023. As the sole managing member of TKO OpCo, TKO Group Holdings, Inc. operates and controls all the business and affairs of UFC and WWE. TKO Group Holdings, Inc. is subject to corporate income taxes on its share of taxable income of TKO OpCo. TKO OpCo is treated as a partnership for U.S. federal income tax purposes and is therefore generally not subject to U.S. corporate income tax. TKO OpCo’s foreign subsidiaries are subject to entity-level taxes. TKO OpCo’s U.S. subsidiaries are subject to withholding taxes on sales in certain foreign jurisdictions which are included as a component of foreign current taxes. TKO OpCo is subject to entity-level income taxes in certain U.S. state and local jurisdictions.

RESULTS OF OPERATIONS

(dollars in millions, except where noted)

The following is a discussion of our consolidated results of operations for the three months ended March 31, 2024 and 2023. This information is derived from our accompanying consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

		Three Months Ended March 31,
		2024			2023
Net revenues
Revenue		$	629.7		$	306.7
Operating expenses:
Direct operating costs			201.0			89.2
Selling, general and administrative expenses			531.9			56.3
Depreciation and amortization			107.1			15.2
Total operating expenses			840.0			160.7
Operating (loss) income			(210.3)			146.0
Other expenses:
Interest expense, net			(64.5)			(53.9)
Other expense, net			(0.3)			(0.3)
(Loss) income before income taxes and equity losses of affiliates			(275.1)			91.8
(Benefit from) provision for income taxes			(25.5)			3.6
(Loss) income before equity losses of affiliates			(249.6)			88.2
Equity (earnings) losses of affiliates, net of tax			(0.1)			0.3
Net (loss) income			(249.5)			87.9
Less: Net (loss) income attributable to non-controlling interests			(145.7)			0.3
Less: Net income attributable to TKO Operating Company, LLC prior to the Transactions			—			87.6
Net loss attributable to TKO Group Holdings, Inc.		$	(103.8)		$	—

Revenue

Revenue increased by $323.0 million, or 105%, to $629.7 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

UFC revenue increased by $6.3 million, or 2%. This increase was primarily driven by $10.6 million of higher sponsorship revenue from new sponsors and increases in fees from renewals compared to the prior year period. Additionally, the increase in revenue was due to $3.9 million of greater live event revenue from having one incremental event as well as $1.4 million of increased consumer products licensing revenue from greater video game royalties. These increases were partially offset by $9.6 million of lower media rights and content revenue from holding one fewer numbered event, which more than offset revenue associated with holding two additional Fight Night events compared to the prior year period.

WWE contributed revenue of $316.7 million for the three months ended March 31, 2024. This revenue was driven by $221.1 million of media rights and content primarily associated with domestic and international rights fees for WWE’s flagship programs, Raw, SmackDown and NXT, and premium live event programming, as well as $50.2 million of live events revenue which was primarily driven by hosting 47 events with live ticketed audiences. The contribution of revenue was also driven by

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$31.6 million of consumer products licensing related to the sale of WWE-branded products and $13.8 million of sponsorship revenue from the sale of advertising.

Direct Operating Costs

Direct operating costs increased by $111.8 million or 125% to $201.0 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

UFC direct operating costs decreased by $6.9 million, or 8%. This decrease was primarily due to reduced costs of $6.3 million from lower production, marketing and athlete costs as well as a decline in direct costs of revenue due to having one fewer numbered event, which more than offset the costs associated with holding two additional Fight Night events compared to the prior year period.

WWE contributed direct operating costs of $115.4 million for the three months ended March 31, 2024. These costs were primarily driven by talent and production-related costs associated with WWE’s premium live events and weekly television programming, and event-related costs associated with 47 live events during the period, as well as $6.0 million of charges associated with restructuring activities related to the Transactions.

Corporate direct operating costs increased by $3.3 million. This increase was primarily related to service fees paid to Endeavor for various operational functions that support revenue generating activities pursuant to the Services Agreement.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $475.6 million, or 845%, to $531.9 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

UFC selling, general and administrative expenses decreased by $2.7 million, or 7%. This decrease was primarily driven by lower travel expenses from holding one fewer numbered event and one fewer international event compared to the prior year period.

WWE contributed selling, general and administrative expenses of $88.1 million for the three months ended March 31, 2024. These expenses were primarily driven by cost of personnel, including $4.9 million of charges associated with restructuring activities related to the Transactions, as well as travel and other operating expenses.

Corporate selling, general and administrative expenses increased by $390.2 million. This increase was primarily due to higher legal costs of $341.8 million, including a legal settlement related to UFC antitrust lawsuits of $335.0 million, as well as $23.7 million of higher cost of personnel and other operating expenses, including TKO executive compensation and other public company expenses following the Transactions. The acquisition of WWE contributed $24.7 million of expenses to Corporate, which was primarily driven by personnel costs, including $0.7 million of charges associated with restructuring activities related to the Transactions, as well as other operating expenses.

Depreciation and Amortization

Depreciation and amortization increased $91.9 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase was primarily due to $91.8 million of expenses associated with the acquisition of WWE.

Interest Expense, Net

Interest expense, net increased $10.6 million, or 20%, to $64.5 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase was primarily driven by higher interest rates on variable rate debt slightly offset by lower indebtedness.

(Benefit from) Provision for Income Taxes

For the three months ended March 31, 2024, TKO recorded a benefit from income taxes of $25.5 million compared to a provision of $3.6 million for the three months ended March 31, 2023. This change was primarily related to the legal settlement for UFC antitrust lawsuits of $335.0 million that resulted in a $39.6 million discrete tax benefit that was recognized in the current year period.

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Net (Loss) Income Attributable to Non-Controlling Interests

Net (loss) income attributable to non-controlling interests was a loss of $145.7 million and income of $0.3 million for the three months ended March 31, 2024 and 2023, respectively. The change was primarily due to the change in the amount of report net loss for the three months ended March 31, 2024 as compared to the reported net income for the three months ended March 31, 2023 as well as the effect of the Transactions.

Segment Results of Operations

As of March 31, 2024, we classified our business into two reportable segments: UFC and WWE. Our chief operating decision maker evaluates the performance of our segments based on segment Revenue and segment Adjusted EBITDA. Management believes segment Adjusted EBITDA is indicative of operational performance and ongoing profitability, and Adjusted EBITDA is used to evaluate the operating performance of our segments and for planning and forecasting purposes, including the allocation of resources and capital. Segment operating results reflect earnings before corporate expenses. These segment results of operations should be read in conjunction with our discussion of the Company’s consolidated results of operations included above.

The following tables set forth Revenue and Adjusted EBITDA for each of our segments for the three months ended March 31, 2024 and 2023:

		Three Months Ended March 31,
		2024			2023
Revenue:
UFC		$	313.0		$	306.7
WWE			316.7			—
Total Revenue		$	629.7		$	306.7

		Three Months Ended March 31,
		2024			2023
Adjusted EBITDA:
UFC		$	195.1		$	186.3
WWE			140.2			—
Corporate			(53.1)			(13.7)
Total Adjusted EBITDA		$	282.2		$	172.6

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UFC

The following table sets forth our UFC segment results for the three months ended March 31, 2024 and 2023:

		Three Months Ended March 31,
		2024			2023
Revenue
Media rights and content		$	214.5		$	224.1
Live events			35.3			31.4
Sponsorship			48.6			38.0
Consumer products licensing			14.6			13.2
Total Revenue		$	313.0		$	306.7
Direct operating costs		$	82.3		$	89.2
Selling, general and administrative expenses		$	35.6		$	31.2
Adjusted EBITDA		$	195.1		$	186.3
Adjusted EBITDA margin			62	%		61	%
Operating Metrics
Number of events
Numbered events			3			4
Fight Nights			8			6
Total events			11			10
Location of events
United States			9			7
International			2			3
Total events			11			10

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WWE

The following table sets forth our WWE segment results for the three months ended March 31, 2024:

		Three Months Ended March 31,
		2024			2023
Revenue
Media rights and content		$	221.1		$	—
Live events			50.2			—
Sponsorship			13.8			—
Consumer products licensing			31.6			—
Total Revenue		$	316.7		$	—
Direct operating costs		$	100.4		$	—
Selling, general and administrative expenses		$	76.1		$	—
Adjusted EBITDA		$	140.2		$	—
Adjusted EBITDA margin			44	%		—
Operating Metrics
Number of events
Premium live events			2			N/A
Televised events			25			N/A
Non-televised events			20			N/A
Total events			47			N/A
Location of events
United States			45			N/A
International			2			N/A
Total events			47			N/A

Corporate

Corporate expenses relate largely to corporate activities, including information technology, facilities, legal, human resources, finance, accounting, treasury, investor relations, corporate communications, community relations and compensation to TKO’s management and board of directors, which support both reportable segments. Corporate expenses also include service fees paid by the Company to Endeavor related to corporate activities as well as revenue generating activities under the Services Agreement.

The following table displays results for Corporate for the three months ended March 31, 2024 and 2023:

		Three Months Ended March 31,
		2024			2023
Adjusted EBITDA		$	(53.1)		$	(13.7)

Adjusted EBITDA for the three months ended March 31, 2024 decreased by $39.4 million, or 288%, compared to the three months ended March 31, 2023. The acquisition of WWE contributed corporate expenses of $20.5 million, primarily driven by the cost of personnel and other general and administrative expenses. The remaining decrease of $18.9 million was driven by increases in cost of personnel, including TKO executive compensation following the Transactions, and other general and administrative expenses, including public company expenses following the Transactions.

NON-GAAP FINANCIAL MEASURES

Adjusted EBITDA is a non-GAAP financial measure and is defined as net income, excluding income taxes, net interest expense, depreciation and amortization, equity-based compensation, merger and acquisition costs, certain legal costs, restructuring, severance and impairment charges, and certain other items when applicable. Adjusted EBITDA margin is a non-GAAP financial measure defined as Adjusted EBITDA divided by Revenue.

TKO management believes that Adjusted EBITDA and Adjusted EBITDA margin are useful to investors as these measures eliminate the significant level of non-cash depreciation and amortization expense that results from its capital investments and intangible

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assets, and improve comparability by eliminating the significant level of interest expense associated with TKO’s debt facilities, as well as income taxes which may not be comparable with other companies based on TKO’s tax and corporate structure.

Adjusted EBITDA and Adjusted EBITDA margin are used as the primary bases to evaluate TKO’s consolidated operating performance.

Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of TKO’s results as reported under GAAP. Some of these limitations are:

they do not reflect every cash expenditure, future requirements for capital expenditures, or contractual commitments;

Adjusted EBITDA does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on TKO’s debt;

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and Adjusted EBITDA and Adjusted EBITDA margin do not reflect any cash requirement for such replacements or improvements; and

they are not adjusted for all non-cash income or expense items that are reflected in TKO’s statements of cash flows.

TKO management compensates for these limitations by using Adjusted EBITDA and Adjusted EBITDA margin along with other comparative tools, together with GAAP measurements, to assist in the evaluation of TKO’s operating performance.

Adjusted EBITDA and Adjusted EBITDA margin should not be considered substitutes for the reported results prepared in accordance with GAAP and should not be considered in isolation or as alternatives to net income as indicators of TKO’s financial performance, as measures of discretionary cash available to it to invest in the growth of its business or as measures of cash that will be available to TKO to meet its obligations. Although TKO uses Adjusted EBITDA and Adjusted EBITDA margin as financial measures to assess the performance of its business, such use is limited because it does not include certain material costs necessary to operate TKO’s business. TKO’s presentation of Adjusted EBITDA and Adjusted EBITDA margin should not be construed as indications that its future results will be unaffected by unusual or nonrecurring items. These non-GAAP financial measures, as determined and presented by TKO, may not be comparable to related or similarly titled measures reported by other companies. Set forth below are reconciliations of TKO’s most directly comparable financial measures calculated in accordance with GAAP to these non-GAAP financial measures on a consolidated basis.

Adjusted EBITDA and Adjusted EBITDA Margin

		Three Months Ended March 31,
		2024				2023
Reconciliation of Net (Loss) Income to Adjusted EBITDA
Net (loss) income		$	(249.5)			$	87.9
(Benefit from) provision for income taxes			(25.5)				3.6
Interest expense, net			64.5				53.9
Depreciation and amortization			107.1				15.2
Equity-based compensation expense (1)			30.2				5.8
Merger and acquisition costs (2)			0.5				5.4
Certain legal costs (3)			345.2				0.4
Restructuring, severance and impairment (4)			9.2				—
Other adjustments			0.5				0.4
Total Adjusted EBITDA		$	282.2			$	172.6
Net (loss) income margin			(40)	%			29	%
Adjusted EBITDA margin			45	%			56	%

(1)Equity-based compensation represents non-cash compensation expense for awards issued under Endeavor’s 2021 Plan subsequent to its April 28, 2021 IPO, for the Replacement Awards (as defined in Note 4, Acquisition of WWE, to our unaudited consolidated financial statements in the Quarterly Report) and for awards issued under the 2023 Incentive Award Plan. For the three months ended March 31, 2024, equity-based compensation includes $9.0 million of expense associated with certain services provided by an independent contractor in the WWE segment and $2.4 million of expense associated with accelerated vesting of the Replacement Awards related to the workforce reduction of certain employees in the WWE segment and Corporate.

(2)Includes certain costs of professional fees and bonuses related to the Transactions and payable contingent on the closing of the Transactions.

(3)Includes costs related to certain litigation matters including antitrust lawsuits for UFC and WWE and matters where Mr. McMahon has agreed to make future payments to certain counterparties personally. For the three months ended March 31, 2024, these costs include the settlement of

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UFC antitrust lawsuits for $335.0 million, as described in Note 16, Commitments and Contingencies, to our unaudited consolidated financial statements in this Quarterly Report.

(4)Includes costs resulting from the Company’s cost reduction program during the three months ended March 31, 2024, as described in Note 15, Restructuring Charges, to our unaudited consolidated financial statements in this Quarterly Report.

Liquidity and Capital Resources

Sources and Uses of Cash

Cash flows from operations are used to fund TKO’s day-to-day operations, revenue-generating activities, and routine capital expenditures, as well as service its long-term debt.

Credit Facilities

As of March 31, 2024, there is currently outstanding an aggregate of $2.7 billion of first lien term loans under a credit agreement dated August 18, 2016 (as amended and/or restated, the “Credit Agreement”), by and among Zuffa Guarantor, LLC, UFC Holdings, LLC, as borrower, the lenders party hereto and Goldman Sachs Bank USA, as Administrative Agent, which was entered into in connection with the acquisition of Zuffa by EGH in 2016. The facilities under the Credit Agreement consist of (i) a first lien secured term loan (the “First Lien Term Loan”) and (ii) a secured revolving credit facility in an aggregate principal amount of $205.0 million, letters of credit in an aggregate face amount not in excess of $40.0 million and swingline loans in an aggregate principal amount not in excess of $15.0 million (collectively, the “Revolving Credit Facility”, and, together with the First Lien Term Loan, the “Credit Facilities”). The Credit Facilities are secured by liens on substantially all of the assets of Zuffa Guarantor, LLC, UFC Holdings, LLC and certain subsidiaries thereof.

Following a repricing under the Credit Facilities in January 2021, term loan borrowings under the Credit Facilities bore interest at a variable interest rate equal to either, at its option, adjusted LIBOR or the ABR plus, in each case, an applicable margin. LIBOR term loans accrue interest at a rate equal to an adjusted LIBOR plus 2.75%-3.00%, depending on the First Lien Leverage Ratio (as defined in the Credit Agreement), in each case with a LIBOR floor of 0.75%. ABR term loans accrue interest at a rate equal to (i) the highest of (a) the Federal Funds Effective Rate plus 0.5%, (b) the prime rate, (c) adjusted LIBOR for a one-month interest period plus 1.00% and (d) 1.75%, plus (ii) 1.75%-2.00%. In June 2023, the parties amended the terms of the First Lien Term Loan to replace the adjusted LIBOR reference rate with Term Secured Overnight Financing Rate (“SOFR”) plus a credit spread adjustment (as defined in the Credit Agreement). The term loans under the Credit Facilities include 1% principal amortization payable in equal quarterly installments and mature on April 29, 2026.

As of March 31, 2024, the Company had the option to borrow incremental term loans in an aggregate amount equal to at least $455.0 million, subject to market demand, and may be able to borrow additional funds depending on its First Lien Leverage Ratio. The Credit Agreement includes certain mandatory prepayment provisions relating to, among other things, the incurrence of additional debt.

The Revolving Credit Facility has $205.0 million of total borrowing capacity and letter of credit and swingline loan sub-limits of up to $40.0 million and $15.0 million, respectively. Revolving loan borrowings under the Credit Facilities bear interest at a variable interest rate equal to either, at TKO’s option, adjusted LIBOR or ABR plus, in each case, an applicable margin. LIBOR revolving loans accrue interest at a rate equal to an adjusted LIBOR plus 3.50-4.00%, depending on the First Lien Leverage Ratio, in each case with a LIBOR floor of 0.00%. ABR revolving loans accrue interest at a rate equal to (i) the highest of (a) the Federal Funds Effective Rate plus 0.50%, (b) the prime rate, (c) adjusted LIBOR for a one-month interest period plus 1.00% and (d) 1.00%, plus (ii) 2.50-3.00%, depending on the First Lien Leverage Ratio. In April 2023, the parties amended the terms of the Revolving Credit Facility to replace adjusted LIBOR reference rate used for the facility with SOFR plus 2.75-3.00%. The Company pays a commitment fee of 0.25-0.50%, based on the First Lien Leverage Ratio and letter of credit fees of 0.125%.

As of March 31, 2024, the Company had no borrowings outstanding under the Revolving Credit Facility and no outstanding letters of credit. In April 2024, the Company borrowed $150.0 million under the Revolving Credit Facility to fund certain share repurchases that occurred during the second quarter of 2024. In May 2024, the Company entered into an amendment to the Credit Agreement, which extended the Revolving Credit Facility’s maturity by twelve months to October 29, 2025.

The Revolving Credit Facility is subject to a financial covenant if greater than 35% of the borrowing capacity of the Revolving Credit Facility (excluding cash collateralized letters of credit and non-cash collateralized letters of credit of up to $10.0 million) is utilized at the end of any fiscal quarter. This covenant was not applicable on March 31, 2024, as the Company had no borrowings outstanding under the Revolving Credit Facility.

The Credit Agreement contains certain restrictive covenants around indebtedness, liens, fundamental changes, guarantees, investments, asset sales and transactions with affiliates.

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The borrower’s obligations under the Credit Facilities are guaranteed by certain of TKO OpCo’s indirect wholly owned domestic restricted subsidiaries, subject to certain exceptions.

Restrictions on Dividends

The Credit Agreement contains restrictions on TKO’s ability to make distributions and other payments from the respective credit groups. These restrictions on dividends include exceptions for, among other things, (1) amounts necessary to make tax payments, (2) a limited annual amount for employee equity repurchases, (3) distributions required to fund certain parent entities, (4) other specific allowable situations and (5) a general restricted payment basket, which generally provides for no restrictions as long as the Total Leverage Ratio (as defined in the Credit Agreement) is less than 5.0x.

Other Debt

In October 2018, UFC entered into a $28.0 million Loan Agreement and a $12.0 million Loan Agreement in order to finance the purchase of a building and its adjacent land (the “Secured Commercial Loans”). The Secured Commercial Loans have identical terms except the $28.0 million Loan Agreement is secured by a deed of trust for UFC’s headquarters building and underlying land in Las Vegas and the $12.0 million Loan Agreement is secured by a deed of trust for the acquired building and its adjacent land, also located in Las Vegas. The Secured Commercial Loans bore interest at a rate of LIBOR + 1.62% (with a LIBOR floor of 0.88%). In May 2023, the parties amended the terms of the Secured Commercial Loans to replace the adjusted LIBOR reference rate with SOFR, and bear interest at a rate of SOFR plus 1.70%. Principal amortization of 4% is payable in monthly installments with any remaining balance payable on the final maturity date of November 1, 2028.

The applicable loan agreements each contain a financial covenant that requires UFC to maintain a Debt Service Coverage Ratio as defined in the applicable loan agreements of no more than 1.15-to-1 as measured on an annual basis (the “Secured Commercial Loan Covenant”). As of March 31, 2024, UFC was in compliance with the Secured Commercial Loan Covenant.

Cash Flows Overview

		Three Months Ended March 31,
(in millions)		2024			2023
Net cash provided by operating activities		$	59.3		$	69.7
Net cash used in investing activities		$	(36.2)		$	(4.6)
Net cash used in financing activities		$	(10.6)		$	(109.6)

Operating activities decreased from $69.7 million of cash provided in the three months ended March 31, 2023 to $59.3 million of cash provided in the three months ended March 31, 2024. Cash provided in the three months ended March 31, 2024 was primarily due to a decrease in net income for the period of $337.4 million, which included certain non-cash items, including depreciation and amortization of $91.9 million and equity-based compensation of $24.4 million, partially offset by an increase in accrued and other liabilities of $283.3 million primarily due to the settlement of UFC antitrust lawsuits for $335.0 million and the timing of bonus payments.

Investing activities decreased from $4.6 million of cash used in the three months ended March 31, 2023 to $36.2 million of cash used in the three months ended March 31, 2024. Cash used in the three months ended March 31, 2024 primarily reflects payments for property, buildings and equipment and investments in affiliates. Cash used in the three months ended March 31, 2023 primarily reflects payments for property, buildings and equipment.

Financing activities decreased from $109.6 million of cash used in the three months ended March 31, 2023 to $10.6 million of cash used in the three months ended March 31, 2024. Cash used in the three months ended March 31, 2024 primarily reflects net payments on debt of $10.0 million. Cash used in the three months ended March 31, 2023 primarily reflects distributions to Endeavor and subsidiaries of $101.4 million and net payments on debt of $8.2 million.

Future Sources and Uses of Liquidity

TKO’s sources of liquidity are (1) cash on hand, (2) cash flows from operations and (3) available borrowings under the Credit Facilities (which borrowings would be subject to certain restrictive covenants contained therein). Based on its current expectations, TKO believes that these sources of liquidity will be sufficient to fund its working capital requirements and to meet its commitments, including long-term debt service, for at least the next 12 months.

TKO expects that its primary liquidity needs will be cash to (1) provide capital to facilitate organic growth of its business, (2) pay operating expenses, including cash compensation to its employees, athletes and talent, (3) fund capital expenditures, (4) pay interest and principal when due on the Credit Facilities, (5) pay income taxes, (6) reduce its outstanding indebtedness under the Credit Facilities, (7) fund the legal settlements described in Note 16, Commitments and Contingencies, to our unaudited consolidated financial statements

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included in this Quarterly Report, and (8) make distributions to members and, in accordance with the Company’s dividend policy, to TKO stockholders.

TKO expects to refinance the Credit Facilities prior to the maturity of the outstanding loans in 2026. It currently anticipates being able to secure funding for such refinancing at favorable terms; however, its ability to do so may be impacted by many factors, including TKO’s growth and other factors specific to its business as well as macro-economic factors beyond its control.

Recent Accounting Pronouncements

See Note 3, Recent Accounting Pronouncements, to our unaudited consolidated financial statements included in this Quarterly Report for further information on certain accounting standards that have been recently adopted or that have not yet been required to be implemented and may be applicable to our future operations.

Critical Accounting Estimates

For a description of our policies regarding our critical accounting estimates, see “Critical Accounting Estimates” in our 2023 Annual Report. During the three months ended March 31, 2024, there were no significant changes in our critical accounting policies and estimates or the application or the results of the application of those policies to our unaudited consolidated financial statements from those previously disclosed in the 2023 Annual Report.