TKO Group Holdings Inc (NYSE:TKO) reported financial results for the fourth quarter and full year 2025, delivering a top-line performance that edged past analyst expectations but revealing significant pressure on profitability that has weighed on the stock in after-hours trading.
Earnings Snapshot: A Mixed Quarter
The company's headline numbers presented a contrast between revenue strength and earnings weakness.
- Revenue: TKO reported Q4 revenue of $1.038 billion, a 12% increase year-over-year. This figure narrowly exceeded the consensus analyst estimate of approximately $1.034 billion.
- Earnings Per Share (EPS): The company reported a non-GAAP EPS loss of $0.08 for the quarter. This result fell sharply below the analyst expectation for a profit of $0.30 per share.
The market's immediate reaction reflected this disappointment on the bottom line. Following the earnings release, TKO's stock declined approximately 2.5% in after-market trading, signaling investor concern over the earnings miss despite the revenue beat.
Segment Performance and Full-Year Context
The earnings press release highlighted divergent performances across TKO's portfolio, with its core sports entertainment assets showing robust growth while other segments faced headwinds.
- UFC: Revenue grew 17% year-over-year to $401.4 million in Q4, driven by higher media rights fees and partnership marketing. Adjusted EBITDA margin remained strong at 53%.
- WWE: Delivered significant growth with revenue up 21% to $359.6 million, largely fueled by the impact of its media rights agreements with Netflix and ESPN. Adjusted EBITDA margin expanded to 46% from 38% in the prior year.
- IMG Segment: Revenue declined 9% to $247.7 million, primarily due to a tough comparison against the prior-year period which benefited from the biennial Arabian Gulf Cup and softer performance in media rights commissions.
For the full year 2025, consolidated revenue decreased 3% to $4.735 billion, a result heavily influenced by the non-recurrence of revenue from the 2024 Paris Olympics within the IMG segment's On Location business. However, full-year Adjusted EBITDA surged 47% to $1.585 billion, underscoring improved operational efficiency and the powerful earnings contribution from UFC and WWE.
Forward Guidance Versus Analyst Expectations
Management provided financial targets for the full year 2026, offering a point of comparison against existing Wall Street forecasts.
- TKO's 2026 Guidance: The company is targeting revenue between $5.675 billion and $5.775 billion and Adjusted EBITDA between $2.240 billion and $2.290 billion.
- Analyst Estimates: Prior to the report, analysts were estimating full-year 2026 sales of approximately $6.082 billion and revenue of $6.191 billion.
The company's sales guidance range sits notably below the analyst consensus, which likely contributed to the negative market sentiment post-earnings. This discrepancy may reflect a more conservative outlook from management or differing assumptions about the performance of the acquired IMG businesses.
Capital Return and Strategic Moves
Alongside earnings, TKO announced the next phase of its capital return program, underscoring a commitment to shareholder returns. The company intends to launch agreements to repurchase up to $1.0 billion of its Class A common stock, funded through incremental debt and cash on hand. This follows the recent completion of an $800 million accelerated share repurchase and the payment of a quarterly cash dividend in December 2025.
Conclusion
TKO's fourth-quarter results paint a picture of a company with powerhouse brands in UFC and WWE driving substantial revenue and profit growth, offset by integration challenges and cyclical softness in its broader portfolio. While the revenue beat was a positive sign, the significant earnings miss and a 2026 sales outlook that trails analyst estimates have given investors pause, as evidenced by the after-hours stock decline. The company's aggressive capital return strategy provides a counterbalance, signaling confidence in its long-term cash generation.
For a detailed look at historical earnings and future analyst estimates for TKO, you can review the data here.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, nor a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
