TKO Group Holdings (NYSE: TKO) lifted its full-year 2026 revenue and Adjusted EBITDA guidance after second-quarter revenue climbed 18% to $1.547 billion, beating the consensus estimate of $1.544 billion. The guidance raise is the headline: revenue moves to $5.775B–$5.825B from $5.675B–$5.775B, and Adjusted EBITDA to $2.275B–$2.305B from $2.240B–$2.290B. Management is signaling confidence in the second half, and the numbers support it.
Growth was broad-based. UFC surged 29% to $535.7 million, WWE rose 12% to $620.9 million, and IMG added 16% to $354.7 million. Media rights drove every segment. UFC's new Paramount deal, which began in January, added $64.7 million to media rights revenue. WWE's new ESPN agreement, effective September 2025, contributed $80.8 million. These are structural lifts, not one-off event timing.
Adjusted EBITDA jumped 23% to $649.9 million, and margin expanded to 42% from 40%. The composition matters. UFC's EBITDA margin shrank to 52% from 59%, a decline management attributed entirely to the UFC Freedom 250 event held at the White House in June. Absent that event, margins would have expanded year-over-year. That is a defensible claim: the Freedom 250 was a high-cost, high-revenue spectacle that compressed margins temporarily. WWE held steady at 59%, while IMG's margin more than doubled to 22% from 9%, driven by FIFA World Cup hospitality sales at On Location.
The EPS miss is the counterweight. Diluted EPS of $1.34 missed the $1.41 estimate, even as revenue beat. Operating expenses were the culprit. Selling, general and administrative expenses rose $98.4 million year-over-year, including $71.1 million in certain legal costs: $30 million in estimated liability and $25.6 million in professional fees tied to WWE stockholder litigation. Those are not recurring operational costs, but they are real cash outflows that depressed net income to $303.9 million from $273.1 million. The adjusted EBITDA story is cleaner, but the GAAP picture shows the drag.
Capital returns are aggressive. Year-to-date, TKO has returned over $1.3 billion to equity holders through buybacks and dividends. The company completed an $800 million accelerated share repurchase in June and a $200 million 10b5-1 plan in July. With slightly over $1 billion remaining under its $3 billion authorization, TKO announced intent to commence additional repurchases. The pace is notable given net debt stood at $4.07 billion as of June 30, with gross debt of $4.659 billion against $592.5 million in cash. Net leverage of 2.2x trailing twelve-month Adjusted EBITDA is manageable, but the buyback pace implies management sees the stock as undervalued relative to the cash flow trajectory.
The guidance raise is modest. The midpoint of revenue guidance moved up by $75 million, or about 1.3%, and the EBITDA midpoint by $25 million, or about 1.1%. Not a dramatic upgrade, but a signal that H1 performance has given management enough visibility to lift the floor. The prior range was wide; the new one narrows it slightly on the top end. The real story is that the media rights deals are now fully embedded in the run rate, and the FIFA World Cup hospitality business at On Location is ramping. IMG's live events and hospitality revenue jumped to $198.5 million from $132.1 million, a 50% increase driven entirely by World Cup sales. That is a multi-year tailwind that will peak in 2026 but likely sustain through 2027.
What to watch next is the legal cost trajectory. The $71.1 million in legal costs this quarter is not sustainable, but the WWE stockholder litigation is ongoing. If those costs persist, they will continue to pressure GAAP net income even as operating cash flow remains strong. The buyback pace also bears watching: at 2.2x net leverage, TKO has room, but a sustained buyback at current levels would increase leverage if EBITDA growth slows. For now, the media rights cycle and World Cup hospitality provide enough momentum to justify the raised guide.