Bolstered by a resurgent representation business, Endeavor handily beat Wall Street forecasts in its Q3 2021 earnings, delivering revenue of $1.39 billion and net income of $63.6 million, swinging the company back to profitability. Wall Street consensus was for revenue of $1.3 billion.
The company, led by CEO Ari Emanuel, executive chairman Patrick Whitesell, and president Mark Shapiro, also raised its guidance for the year from $4.8-$4.85 billion in revenue to $4.89-$4.95 billion in revenue, reflecting further confidence in its core business.
The beat comes after Endeavor missed its Q2 earnings estimates, with revenue of $1.1 billion and a net loss of $319 million. Endeavor went public earlier this year, with UFC driving the company’s business in the month after its IPO.
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Endeavor’s quarter was led by its representation division, which includes the agency WME, as well as its Endeavor Content production studio. Q3 revenue from Endeavor’s representation division more than tripled compared to Q3 of 2020 to $664.7 million. Revenue was also up more than 100% compared to Q2 of 2021. WME’s Q3 was bolstered not only by strong demand, but by deliveries of film and TV content that had been delayed by the pandemic.
In fact, Emanuel said on the company’s earnings call that, when excluding Broadway and music, WME is actually up from Q3 2019, pre-COVID, a sign of the overall strength of the TV and film production business, with streaming services and linear channels all fighting for top-shelf content and talent.
“Linear and digital platforms are in a race for content, creating an uptick in film and TV productions,” Emanuel said. “We have room for more optimism, as Broadway recently reopened, and music artists reopen tours in large venues.”
The representation division was also bolstered by the company’s in-house production arm Endeavor Content, which is currently up for sale as part of a deal the company signed with the Writers Guild of America earlier this year.
A source familiar with the process says that the company is down to 2 or 3 final bidders and is “toward the later innings of the game,” adding that the company is “bullish on the headline price” for the production company. Endeavor will retain a 20% stake in Endeavor Content once the deal closes and will also hold on to the company’s non-scripted division and film sales unit.
“We are very successful in the film advisory business, and in the non-scripted documentary space, and we see the demand from the streamers and linear players only increasing the mix,” Emanuel said on the call. “It is a good business for us, and it will continue to be a very good business for us.”
Endeavor’s owned and operated sports division, led by UFC and Professional Bull Riders, had revenue of $288.5 million, down slightly from Q3 of 2020. That was due to UFC holding extra events a year ago as COVID pushed some events initially slated for Q1 and Q2 into Q3 and Q4, as well as one-time contract termination fee of $25 million. Still, Endeavor said Monday that the first none months of 2021 are the best in the history of UFC.
The company’s events, experiences, and rights division saw its revenue rise by $62.1 million to $446.3 million, mostly driven by an increase in event and sports media production revenue.
Elsewhere, the company is planning to double down on its sports betting business once its acquisition of OpenBet closes, which is expected in the first half of 2022. Emanuel said on the call that the company will combine OpenBet and IMG Arena into a new sports betting operating segment when the deal closes, which he said will increase the company’s transparency into that business line.
“We have already received a high-level of interest from sports books and rightsholders around the combined entity,” Emanuel said.
