Endeavor Group Holdings Inc

NYSE:EDR

Earnings Call Transcript 2021-Q2

[ConferenceCall Participants]

John Hodulik - UBS

Kutgun Maral - RBC Capital Markets

Ben Swinburne - Morgan Stanley

Meghan Durkin - Credit Suisse

Jason Bazinet - Citi

David Joyce - Barclays

[Operator]

Hi. Welcome to Endeavor’s Second Quarter 2021 Earnings Call. At this time all participants are in a listen-only mode. After the speaker's presentation there will be a question-and-answer session. [Operator Instructions]. Please be advised that today’s conference is being recorded. [Operator Instructions].

And with that, I will now turn the call over to Samanta Stewart.

[Samanta Stewart, Senior Vice President & Head-Investor Relations]

Good afternoon, and welcome to Endeavor's second quarter 2021 earnings call. A short while ago we issued a press release, which you can view on our investor relations site, [e-mail]. A recording of this call will also be available via the site.

Today you will hear from Endeavor’s CEO, Ari Emanuel; and CFO, Jason Lublin and our President Mark Shapiro will join us for the Q&A session.

The purpose of the call is to provide you with information regarding our second quarter 2021 performance in addition to our financial outlook for the balance of the year. I do want to remind everyone that the information discussed will include forward-looking statements, and/or projections that involve risks, uncertainties and assumptions as described in the risk factors section of our filings with the Securities and Exchange Commission, including our first quarter 10-Q and updated second quarter 10-Q.

If these risks or uncertainties ever materialize or any assumptions prove incorrect, our results may differ materially from those expressed or implied by such forward looking statements and projections. Forward-looking statements speak only as of the date they are made and we undertake no obligation to update them publicly in light of new information or future events, except as legally required.

Our commentary today will also include non-GAAP financial measures, which we believe provide an additional tool for investors to use in evaluating ongoing operating results and trends. This measure should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in our press release issued today, as well as in our IR site.

With that, I'll hand it over to Ari.

[Ari Emanuel, Chief Executive Officer]

Thanks Sam.

Continuing last quarter's positive trends, we saw increased demand across our portfolio, from premium content to sports betting, and continued to execute across each of our growth factors in our own sports properties, EE&R, and representation segments. Due to the positive momentum and our continued positive outlook for the balance of the year, we have increased our annual guidance. Jason will discuss this in more detail when he walks you through our financial results for the quarter.

But first, I want to spend a few minutes and how our role as owner, operator and representative of premium sports and entertainment, IP and content and talent has enabled us to get in front of industry trends and lead new markets, creating new revenue opportunities across the company

Let's start with the underlying trends in sports media, and the incremental opportunities we have to drive growth. Data shows that the U.S. remains the most valuable sports rights market in the world with an estimated $19.5 billion of annualized rights value last year. Media companies looking to acquire large D-to-C audiences continue to aggressively compete for rights driving fees up to record levels without also having to maintain or grow their linear presence.

In the second quarter, we renewed our Wimbledon U.S. media rights agreement with ESPN and the tennis channel until 2035 for a significant increase over the prior term. And internationally we guided Football Australia through a landmark domestic media rights deal with Viacom, CBS, and Paramount Plus in Australia, marking the first time the national team and the FFA Cup rights were sold separately from the league. We're also seeing record media rights deals for the UFC in countries like China and France.

Our last five renewals have yielded on average over 100% increases. Our strength as a curator and distributor of premium sports media rights, also allows us to capitalize on new enterprises and consumer businesses including sports betting and NFT's. The pandemic further accelerates online betting adoption, which has helped fuel IMG arenas growth beyond video and data streaming into online betting pass for UFC and Golf. Meanwhile, we continue to sign top tier operators like BetMGM while adding marquee properties and events like the Ryder Cup to our offerings.

Sports wagering is now legal in 21 states and growing fast. Internationally, the Netherlands and Germany have reregulated or in the process of attracting new frameworks that we believe will pave the way for betting markets to open their as really as the fourth quarter of this year.

As it relates to NFTs, we've made a deal with Dapper Labs who we invested in three years ago when we saw the NFT trend happening to create a UFC NFT platform. We also closed the deal for UFC and Panini to create NFT trading cards, the first release of which sold out in less than 24 hours. And now we're closing countless NFT deals on behalf of clients from Wimbledon to Wayne Gretzky.

Now turning to television and film content. The first half of 2021 saw media and telecom M&A deals reached their highest level in years, $83 billion. Whether its Discovery and Warner Brothers media, or Amazon and MGM, they become super competitors alongside the likes of Netflix and Disney all making big bets on a D-to-C strategy. They have deep pockets and need to differentiate their platforms to drive subscriber growth. The competition for content and count is at its highest level I've seen in 26 years. The number of original series and movies commissioned by streaming platforms grew 48% for the past four quarters as compared to a prior fourth quarters. Netflix alone revealed it will spend 17 billion on content in 2021 up 44% compared to 2020. And remember, we remain platform agnostic and one of the largest representatives of talented independent suppliers of content to the biggest streamers. These trends are visible in our representation segments where our WME bookings for the second half of 2021 are off double digits over where they work at the same point in 2019, the most recent non-COVID impacted here.

We are seeing further evidence of premiums being placed on talent in scale and value of individual deals we've been a part of, whether it's a multi-year deal for Peyton Manning for Monday Night Football on ESPN Plus, [indiscernible] with the Food Network, Miley Cyrus with NBCU and Peacock, Michael B. Jordan with Amazon or multi project deal for Shirley's role with Netflix and Ryan Reynolds with Paramount.

The recent Hello Sunshine sale is yet another data point that spotlights the value of premium content. It also demonstrates the potential of marquee talent to emerge as lifestyle brands, building commercial ecosystems around communities and fans. We're seeing this more than ever in our equity deals we're closing for Talent Ventures Group. The unique value proposition of our company is that it's fueled by a representation segment, which is built on direct access to talent as brands. We work with talent to monetize their brands through our own channels and elsewhere. And that's really why representation is a wealth creation vehicle and the seed planting engine of our entire business. The pandemic has also spurred the growth of new distribution models, while creating lasting shifts in consumer behavior, including a surge in demand for formats like podcasts, video games, social and marketplace apps. Our flexible business model allows us to opportunistically expand into and capitalize on these burgeoning growth verticals. For example, this past quarter alone, we've closed new podcast deals for 40 clients, while four clients shows hit number one, the Apple Charts.

And now I want to provide just a few business highlights. First, we announced during our last earnings call that we expected to pay down $600 million of debt in the third quarter part of our continued commitment to reduce leverage. We actually paid that amount down in the second quarter. We also shared news of two now closed acquisition, next college student athletes for NCSA, a leading college recruiting business, and FlightScope, a European based data collection, AV production and tracking technology specialists. Both acquisitions bolstered our capabilities while creating large moats around our IMG Academy and IMG arena businesses.

In July, we announced a series of acquisitions that will further expand our capabilities while opening opportunities in new geographies. These were Mailman Group, a leading digital agency for sports brands and right holders. Mailman will integrate with our IMG media and 160 over 90 businesses, while bringing new top tier clients into the fold. Ticket software company 2Q to elevate our suite of offerings on location, our experiential business. The addition of dynamic pricing capabilities enable us to generate more ticketed revenue across our experiential events. And finally, 22, a boutique licensing agency in the Middle East, a region that presents incredible growth opportunity for IMG licensing, expanding our reach in this growing region opens door for further expansion down the road.

With that, I'll hand it over to Jason.

[Jason Lublin, Chief Financial Officer]

Thanks, Ari, and good afternoon, everyone.

I'll start by walking you through our financial results for the quarter and provide you some additional color around what we're seeing each of our segments and then I'll briefly discuss revised guidance for this year. Please note that all comparisons are to the prior year period, which was impacted by COVID.

For the quarter ended June 30, 2021, we generated approximately 1.1 billion in revenue 648 million or 140%. Adjusted EBITDA for the quarter was approximately 168 million, up 122 million. Our Owned Sports Property segment continued to perform very well with revenues of 258.9 million an increase of 106.6 million or 70%. The increase is primarily driven by higher media right fees due in part to contractual escalators and our media rights agreements, higher sponsorship fee from the renegotiations of existing deals, coupled with new deals, and increased event output.

Adjusted EBITDA for the quarter was 132.3 million double that of the same period in 2020 primarily driven from the higher revenues I just mentioned. UFC had a huge second quarter helping power to its biggest first half ever in terms of revenue and adjusted EBITDA. The quarter benefited from three incremental live events inclusive of one pay per view. All three pay per view events in the quarter were at full capacity and broke local gate records. Beginning with UFC 261 in Jacksonville, the first sold out major sporting event with full fan capacity at an indoor arena in the U.S. since early 2020.

More recently, our July UFC 264 event in Las Vegas finished at the second highest gate in T Mobile arena history and the third highest gate among UFC events of all time. The event had more than 20,000 fans, the highest attendance ever recorded at a sporting event in T Mobile. Beyond ticket sales for these events, we also saw increases in other event related revenue streams like international and commercial pay per view. UFC continues to have one of the most international youngest and most engaged fan bases in all of sports, making it highly attractive to partners. Year-over-year, we've seen nearly 30% growth in the 18 to 24 demographic and we're currently ranked third behind the NFL and NBA among millennials.

In addition to what Ari shared on the partnership front, we recently closed new deals with crypto.com and Jose [indiscernible], while renewing and expanding our relationship with Monster. Partnership revenue is up over 25% versus 2020. Last is our, release to viewership UFC events, which are simulcast across the ESPN family reached 18.3 million viewers on ESPN TV networks alone in the first half of this year of 10% over last year. Meanwhile, in this segment PVR is on track to have its best year ever across key categories including media rates fees, sponsorship, merchandise sales and licensing.

Now turning to our events, experience, and right segment. This segment recorded revenue of 528.7 million an increase of 408.8 million. Media rights and production revenues increased in the quarter due to the return of a full schedule of European soccer matches and the resumption of other events like the Miami Open, in addition to new and secured business.

Adjusted EBITDA for the quarter was 36.8 million, up 79.5 million compared to Q2 2020, where we recorded a loss. This was primarily due to the increased revenue partially offset by direct operating costs to support increased business activity, as well as cost associated with our continued investment in the business.

To give you a little color about what we're seeing in this segment, college football and NFL ticket packages for the upcoming season are experiencing double digit retail price increases for 2019. High Park Winter Wonderland, our month-long winter festival that starts in November in London had its highest grossing revenue week in its history when tickets went on sale earlier this month. Lastly, an IMG Academy, it's been a record summer in terms of number of campers and at this moment, we have more students enrolled for the fall semester than any prior school year.

Moving on to our representations segment, revenue was 328.2 million, an increase of 135.4 million or just over 70%. This growth was primarily driven by an increase in client commissions and project deliveries at Endeavor content, including episodes of season two of Truth Be Told for Apple TV, the Wall on NBC and Netflix film Blue Miracle. While we need to hire year-over-year delivery from Endeavor content, some deliveries we have forecasted occur in the second quarter have either now been delivered or will be in Q3. That slight timing delay predominantly from three shows negatively impacted our revenues in the quarter by approximately $90 million.

Adjusted EBITDA for the quarter was 61.7 million, an increase of 9.6 million or just over 18% as we realize a higher percentage of revenue growth from the Endeavor content versus clients in the quarter. We also had a higher operating expenses, as we diligently manage the pace at which we brought back some costs to support increased business activity.

As Ari mentioned, we're pacing ahead as a relates to WME booking for the second half of the year and we're booking client for dates much further into the future. We're also seeing the beginning of a rebound and live music and countries leading the way with sold out toward for clients like Garth Brooks and Eric Church.

On the brand side, 160over90 is gaining steam as companies are doubling down and getting back in front of consumers. We have significantly increased our scope of work with clients including T Mobile, Capital One, Visa, Lowe's, Audi, Amazon, and AT&T, while continuing to sign new clients. I mentioned Endeavor content had a strong performance in the quarter.

I also want to note that we recently began the sale process for that business. Although we're in the early stages, we've already received a lot of incoming interest. We plan to divest the required portion of the restricted business and retain the non-restricted businesses. When we have more to share, we'll let you know.

Meanwhile, the updated guidance I'll share shortly assumes Endeavor content is status quo for the balance of the year. Finally, corporate adjusted EBITDA for the quarter was a loss of 62.7 million, reflecting an increase in cost while on to support increased activity and investment in the business, as well as the costs associated with being a new public company.

Before I get to annual guidance, I want to briefly discuss our recent debt pay down that Ari mentioned. We paid down 600 million of our outstanding debt in Q2, which consisted of the repayment of approximately 163 million under the WME IMG revolving credit facility, which now carries a zero balance; 257 million representing the entirety of the WME IMG term loan issued in May 2020, which was the highest cost paper in our capital structure; and 180 million of the first lien term loan under the UFC facilities. Because of these moves, we will realize 35 million in annual interest savings going forward.

Onto our updated guidance for the full year of 2021. As Ari mentioned earlier, we have experienced recovery in our business happening slightly faster than we had originally anticipated. And although we continue to closely monitor the Delta variant, bookings, ticket sales and other indicators remain positive for the balance of the year. We are therefore raising our revenue guidance from a prior range of 4.76 billion and 4.83 billion to now between 4.8 billion and 4.85 billion.

And on adjusted EBITDA, we're raising the range from 735 million to 745 million to between 765 million and 775 million. The increase in our annual guidance is based on this [indiscernible] on our business in Q2 and our continued positive outlook for the business. In some, even though we recognized most activity levels are not yet at historical levels, we're very encouraged with business trends and look forward to what's to come for the balance of 2021 and a more normalized level of activity in 2022.

With that, I will turn it back over to Sam.

[Samanta Stewart, Senior Vice President & Head-Investor Relations]

Operator, will you give the instructions on how people can ask the question.

[Operator]

[Operator Instructions] First question comes from the line of Brett Feldman from Goldman Sachs.

[Unidentified Analyst]

Hey, thanks. This is Steven on for Brett. Thanks for taking the question. A few on UFC, if I could, first we were hoping, if you could expand a little bit more on the viewership and pay per view activity that you saw in some of the more recent UFC fights and like 2Q and like 3Q. And sort of what the fights look like maybe for the rest of the year and how to expect like to compare it to the first half record activity that we saw.

Second now with Conor out for the next few months, what fighters do you expect to step up and lead the league here for the next couple of quarters? And then lastly, could you remind us where you are with some of the longer term growth initiatives that you outline for the UFC, particularly around the timing of international rights contracts being renegotiated? Thank you.

[Ari Emanuel, Chief Executive Officer]

Thanks. This is Ari. So I guess while before -- there's a bunch there, so I'm going to I think I'm going to hit them all. So I just want to reiterate that the UFC had its biggest first half in the company history in terms of revenue and adjusted EBITDA, virtually every P&L and cash flow metric, you could consider that all time high in the 26 years of the UFC. So, in 25 five years, we've developed global stars at every level. Conor McGregor is going to fight again. And I just want to remind everybody, he's only fought three times in the last five years. And going back all the way in the history, it was Tito Ortiz, first, if you didn't have Tito, nothing happened. Lastly, the last big star was Ronda Rousey. And the same conversation happened. We've got a great roster and a very deep bench. I just want to reiterate, we got eight of the top champions out of the 11 are international.

On the pay per view front, over the last 12 months, we've had a record total pay per view buy and the average pay per view buy per event, it's been at a record level. Our ESPN deal is, we're three years into a seven year deal. There's growth built into our -- escalators built into our fees. We continue to draw huge strong ratings on ESPN, most watched cable network, day, and time periods, from viewership on ESPN, key growth, drivers for the platform. ESPN has ordered new episodes, so they want more not only our fights, but also they have now a contender series and they've ordered as you may have been seeing the Ultimate Fighter that started out on Spike TV.

And in the topics of ratings our social impressions in the three weeks leading up to and including UFC 264, we exceeded those of the entire Olympics. And then on sponsorship for growth factors, Q2 was one of the biggest quarters of all time in terms of sponsorship revenue, up more than 25% from last year. We continue to sign and renew large multi-year deals with DraftKings, crypto.com and Monster and we're opening up new categories globally.

Internationally, as I said to you before, the mix is 90% of our fans are international and 10% are the United States. International only represents 10% of the current UFC revenue mix demonstrating a huge addressable market that we can hit there. And if there's any indication if there's meaningful upside in our international rights, we've mentioned before China and France feels that we're up. And our last five renewals, they've yielded greater than 100% increases. Fight pass is up over 25% in the last 12 months. And we just went out with which I talked about in my opening statement, with Panini, for NFTs we had three drops, they sold in 24 months, revenues of 1.4. that bodes very, very well from our perspective on our Dabbler last deal. So I haven't even mentioned IMG Arena and the gaming aspect of the UFC. So those are some of the -- I think I've hit for your whole question. But there you go.

[Operator]

Next question comes from the line of John Hodulik from UBS.

[John Hodulik]

Ari, quick question on the -- couple of questions on the representation business. Obviously, a lot of growth in D-to-C and then the content going into those platforms. How closely tied is that representation business to that spending? Number two, what kind of visibility do you have over the next several years? And then can you talk a little bit about how you guys get paid, maybe getting paid differently as less of it comes from the box office, and more of it comes from the D-to-C platforms. Thank you.

[Mark Shapiro, President]

Hey, it's Mark Shapiro. I'll take that second half, and then, why don’t we answer that, and then we'll go back and hit the first part, John, I'm not sure we followed you there. But look, I'll tell you, with regard to our representation and our talent, I mean, frankly, we're in a pretty darn good spot. I mean, I would say, one of the reasons why we're so cautiously optimistic for the rest of the year. You kind of look at what's going on and you hear Bob Chapek’s earnings call last week with Disney, and he pointed a lot to seeing production slowing down here and there and nervous about production slowing down. Frankly, we're not really seeing any of that, as Ari pointed out in the opening comments. I mean our bookings for film and TV are up double-digit in the teens, over this exact point, in 2019. So it's a pretty frenetic pace right now, it's busy, big pipeline, a lot of development. And a lot of platforms actually are starting to stockpile content. So not knowing what's going to happen, whether it's delta epsilon, whatever, they're going to order, they're going to shoot as much as they can. And that's serving to our benefit.

As far as pay structure and compensation, we're sort of hitting on all corners there as well. I mean, if you now take your actor, actress, recent news, obviously, you see what's going on with Scarlett Johansson. And then you see on our side with Emma Stone and the deal we just cut with Disney. It's sort of working in all of our favorites right now, given this linear nonlinear AVOD, SVOD world we're living in. We're getting the front end for our clients as they go into movies and TV series that we always get. But increasingly, we're getting the back end bought out the way you see kind of the Netflix model. And now, the studios are kind of coming to the table to discuss how we're going to get compensated for the lifetime value of cells. And they know that conversation is going to come in anyway. So they're preemptively having that conversation with us and those are just beginnings. So take for example, your Jungle Cruise, you want to watch it on Disney plus, well, you can't watch it, of course, unless you're a Disney Plus subscriber. So yes, it goes into the box office math, in terms of how many pay per views are bought for Jungle Cruise. But what about the folks that are paying, whatever it is these a 7.99, 9.99, 11.99 depending on your platform to become a subscriber, you're heard Chapek say at the same time, a churn is very low if you're a Disney Plus subscriber.

So we have actors and actresses that are driving you to get the platform in the first place. We're there a piece of that and that part of the compensation is now coming into the equation. So it's a very warm market if you will. And of course, there's a lot of competition, a lot of streamers, a lot of people buying, and we're going to play each of them against each other, we sit right in the center of that ecosystem. So we're feeling good about that. What was your first part, John?

[John Hodulik]

The first part, I was just saying, how tight are you to the growth in D-to-C, which I think you guys answered, but I guess and you answered the last part about, more of it, how do you guys get the back end when you're not exposed to the box office and more exposed to the D-to-C [indiscernible]? But I guess the middle part was, did you goes faster than the content spend, because you're taking market share, and there's inflation in product, or production values, or should you go slower? What's the relation? How should we think about that relationship?

[AriEmanuel]

Okay. You have to realize we're platform agnostic. Okay. So if it's a linear play on USA, or if it's Netflix, Apple, Amazon, Pluto, at Disney Peacock, et cetera. We're agnostic. So we sit right in the perfect spot here, and are capturing that value. And right now, we have Mark just said, on Emma Stone, we have all three categories, whether it goes direct-to-consumer, whether it goes day and date, whether it goes to theatrical, Warner Brothers, as you heard, they made all their deals with they said the direct-to-consumer with all their movies, they paid out $200 million in the back end. So we're capturing that value. And Mark just told you the fourth iteration that's coming. So we think we are in the best spot for that situation.

[Mark Shapiro, President]

We're going to the speed of the marketplace. I mean, that's the bottom line and there's a lot of demand. There's folks looking for a lot of supply. And we're going to serve it up. So it's definitely something to watch. But at the same time, we feel good about the position, given the WME is the industry leader, whether its revenue volume scale, we're there and will serve the pipeline.

[Operator]

Next question comes from the line of Kutgun Maral from RBC Capital Markets.

[Kutgun Maral]

I want to ask about sports betting, Ari, you spoke about it a bit in the prepared remarks, but I was hoping you could expand on that commentary and help us just better understand your exposure to sports betting through your IMG ARENA business. It seems like a big market that's only going to get bigger, whether it's in the U.S. or abroad. So it would just be great to hear what you're seeing as the trajectory ahead and the overall potential for that business? Thanks.

[Ari Emanuel, Chief Executive Officer]

So I'll just go with the following and then Mark will pick up the second half. The value of global sports betting market is estimated right now to exceed $80 billion by the end of the year and the addressable market, they estimate by 2025 is $120 billion. So it's a huge market for us to kind of walk into. And, Mark, can pick up the --

[Mark Shapiro, President]

Yes, look, I'll say, Kutgun, we're -- this is about a bigger growth driver as you can get when it comes to Endeavor. I mean, we've got 21 states that are online and approved to start taking sports wagering. We've got another 10 that are essentially approved through regulation will come online very soon. Everybody has turned from Wrigley Field to Fenway Park, somebody is going to build a sports book next to the arena or the field to capture all these folks that are sports fans and looking to place a bet. So IMG ARENA sits in a really good place. We buy rights from leagues and federations. We sell those to the sports books, the territories and the rights are expanding, the pie and our participation of that pie is growing. And right now we sit there as the exclusive data and video provider for majors like PGA, ATP Tour, UFC, and at the same time, we serve up a whole host of Soccer Federation's snooker, cricket across the board.

So big business for us. Our exposure is relatively low to answer your question, and here's why. When you see us do a deal for sports betting and get rights, you can just assume that's going to be a profitable deal for us on paper, meaning we are going to sign up and lock up media rights partners or sports books, ensuring our profitability before we make a bid for the deal. And we have line of sight into that because, of course, we're serving up media content, we're selling media rights, in 150 different regions with 160 different sports properties.

So our visibility is like no other. And when we go in to sell media rights or even bid on media rights, I should say, we're buying the media rights for distribution, the games themselves, and we're hooking into that video and data stream. So we're going in with a bundle proposition. And we can throw one after the other in order to ensure we don't have exposure. Some of our competitors don't do that, they're only in the business, the betting business or other competitors are like in front are only in the media distribution business. We're in both and that produces and really limits our exposure to risk.

[Operator]

Next question comes from the line of Ben Swinburne from Morgan Stanley.

[Ben Swinburne]

Two questions. One, just thinking about more the back half of the year, I mean, Jason, you talked a little bit about it in your guidance, but can you give us a sense for your expectations around a full reopening, any events we should be focused on as it relates to Delta or other swing factors that are important? And then I thought the QQ acquisition was really interesting. I know this is for Ari or Mark, whoever wants to take it, what are you thinking about the opportunity in ticketing, because I can see how that technology would help On Location, but it would seem like it could have a lot of live event businesses, I don't know if that's a business you think you've licensed out to other partners over time, are you thinking but a bigger play in ticketing, just anything you want to talk about on the QQ On Location front would be interesting and helpful? Thank you.

[Mark Shapiro, President]

Yes, Ben, great question. It's Mark. And second one, I mean, we're not going to go too deep there, otherwise, we'd have to bring you into our strategic planning team.

[Ben Swinburne]

I'm ready.

[Mark Shapiro, President]

We think there's a real opportunity as it relates to ticketing for all the reasons you've mentioned. I mean, think of all of our media partners we're in business with, think of the 800 events that we represent, stage, license, sell, think of what we do with On Location to your point, I mean, clearly this is an avenue that is exploitative, let's put it that way for us.

You got to be careful, I mean, Ari and I, we're both on the board at Live Nation. Ticketmaster, we can tell you that sometimes these margins are extremely low, but they lead to a whole ecosystem of business that is, frankly, something we're exploring right now. And, of course, the extra bang for the buck you get is the data that comes with that, the CRM, the consumer front to back end relationship. So we'll leave it there for now, but as you can see, we're -- we clearly have an affinity towards it, let's put it that way. I think secondly, it's just the pent-up demand really, we're looking around and we're seeing a lot of reports. And, of course, we have to stay cautiously optimistic, because who knows where this Delta goes and epsilon, et cetera, but we're getting a couple of cancellations here and there. And you saw the Jazz Festival in New Orleans was canceled, we don't own it, but we have a lot of our artists in it.

[Ben Swinburne]

Yes.

[Mark Shapiro, President]

You saw we've had a marathon here, they're canceled. We have a golf tournament, a big golf tournament in China coming up, that's actually been canceled, and we may have an LPGA event that gets canceled. But by and large, stuff is going on, right? The competitions are going on. The sports events are going on. Our Q4, a lot of our stuff like Winter Wonderland is on sale. And frankly, we beat numbers on EBITDA here, even with the Delta, and we're raising guidance on both revenue and EBITDA with the rest of the year, still knowing that, that uncertainty exists.

And I think one of the reasons why we're bullish and optimistic is, frankly, our business is diversified. Let's remember, last year, in the nine months at the heart of COVID, we still did two-thirds of our budgeted revenue for the year. So as much as Endeavor was hurting because we were the target for this pandemic in terms of our business, we filled it 70% of the -- of our own budgeted revenue. And now going forward, remember, no matter how hard Delta comes back, as long as the events take place, fans, or no fans, we're in good shape. This isn't our first rodeo, if not the first rodeo for the pandemic for our sports rights partners, they're going to put on these soccer games, they're going to put on these football games, and as long as they do, we're going to get paid in the different revenue streams that we have.

And then really on the cost side, when you look at that, even though our costs are climbing up because the business is coming back in such a big way, we're still operating in a few areas with a very skeleton fast. In fact, we have a few of our businesses where we still have a hiring freeze that remains. So we can toggle that cost structure to make it reflective of the marketplace.

Business slows down, business is canceled, we stopped hiring and vice versa, it warms up and we get going, I would actually say that's the bigger challenge, hiring folks in this marketplace. We have 400 open positions right now in our 6,000 employees that we have. And it's tough to get folks to take a job these days, just given that they're kind of reflecting on their place in life. So, bottom line is, we've got some good EBITDA upbeat, we've got revenue and EBITDA guidance going up, and that's really just an all in indication of events that are taking place, production that's hot right now, our distribution business, it's strong, and you've heard us talk about representation. And then finally, IMG Academy, I mean, Jason mentioned in the opening comments, hot campuses, I mean, biggest summer camp business we've ever had in IMG Academy, and our bookings for boarding school next year are at a record high. So all systems go right now for Endeavor.

[Ari Emanuel, Chief Executive Officer]

I would just say one thing just to kind of, if you want to think about the whole picture, when you look at the other companies that trade in our space, whether it be WWE, Formula 1, Live Nation, they're all one-trick ponies. We have multiple facets, which you you've heard, whether it be sponsorship or on sports properties, representation, On Location, representation of sports, there are multifaceted aspects of our business, and we have gone through the pandemic, and we're raising EBITDA, we're raising guidance, so we actually understand our business, and I think you guys are going to learn that we're an multifaceted business that we get to pivot back and forth from.

So, I mean, if you just look at our own -- our own sports properties, year-to-date, look 70% year-to-date, on that -- in revenue, we have not even talked about how great PBR is doing, right. Another thing inside that space, right, that's -- we're biggest in 21 than ever before. So the company has multiple different aspects of our business that protect us against anything in the future.

[Operator]

Next question comes from the line of Meghan Durkin from Credit Suisse.

[Meghan Durkin]

Hi, guys. I didn't hear you mention it, but have you signed any college athletes since the NCAA approved the name image and likeness fields? And how do you expect these types of deals to impact the college sports landscape over time, maybe is there a way to quantify that, that profit pool for the NIL deals? And then can you talk about how the UFC Pay-Per-View revenue is recovering? I think the commercial and the residential mix has been probably changing, but how is that going with the reopening?

[Mark Shapiro, President]

Okay, so, hey Meghan, it's Mark, I'll start with that and then Jason or Ari will talk about the mix on the Pay-Per-View. Look, you just hit spot on a real growth, a future growth driver for this company and that is NIL, named image and likeness, and that's going to hit up in a bunch of different places, 160over90, with all the brands that they represent, who are looking to get behind some of these emerging athletes is going to hit us in our sponsorship division and the deals we can bring in there, it's going to hit us and have a great impact to Learfield IMG College as these endorsement deals for athletes lead to bigger deals for our colleges.

So, for example, I'm sitting with one of the big 10 athletic directors last week, and he tells me about how they just closed the first big QSR deal for the university. And he came on the heels of this QSR, I will not name it, wanting to do a deal with the quarterback of their Division One Football Program, and that then led to a big QSR deal with school. So we're going to benefit in that way as well. This is just a real growth opportunity for us because we haven't been able to target college athletes. We haven't been able to target high school athletes. As you know, there's a senior quarterback in Texas, one of the top reps in the nation, who's going to be going to Ohio State and skipping his senior year. So these folks are very nice kids, frankly, are very attractive to so many advertisers out there. It'll allow us to sell them, but at the same time, it'll allow us to develop a relationship, so that when they go throw, they end up signing with WME Sports first and foremost.

So we'll start to lay out financially what that means as we go forward, but we think it's a real growth engine for us, and look no further than the Olympics. We had 60 athletes competing in the Olympics that brought in 30 medals, who are very hot to trot right now and quickly hot to trot with the advertisers, so the advertisers want to get in with them, want to get aligned with them, while the Halo is still there. And it's something we intend to capitalize on it in a big way. And also a growth area because we haven't really been big when it comes to on-field contracts, meaning WME Sports and IMG have sold a lot of marketing deals for athletes, but other than golf and tennis, we haven't represented them on field with their on-field contracts. So we're moving into that space now and NIL will just accelerate the growth opportunity.

[Ari Emanuel, Chief Executive Officer]

And as I said, it's our -- second half is the biggest half in the company's history as it relates to UFC. We're up in our commercial, residential from 2020. So -- and that's just going to continue to grow. And I just want to say we're up in the second half larger than the company's history without -- with only three live events, and our commercial and residential not being where it was in the past. So we're in pretty good shape there and I think we'll be growing significantly.

[Operator]

Jason Bazinet from Citi.

[Jason Bazinet]

I just had three quick EC ones. I think you said Endeavor Content might be up for review. I seem to remember that was a reasonably large top-line contributor sort of in outyears in your model. Is that something that you think impinges upon your top-line trajectory if you end up selling it? Second, can you just spend one second, maybe this is for Jason just talking about the discrepancy in the diluted shares that you put out versus what I think we all had in our model? And then third, I noticed your deferred revenue balance was really strong -- can you -- on the balance sheet, can you just remind us what divisions that deferred revenue flows into? Thanks.

[Mark Shapiro, President]

Okay, great. We will -- let me hit the EC and then Jason will comment on your final two questions. As far as Endeavor Content goes, we are just actually beginning our sales process. So what's going on there is we have to sell about 80% of EC. Now remember, this isn't all of Endeavor Content. It's just the project that fall under the jurisdiction of the WPA. So just those restricted projects if you will. So we just embarked on the sale process. We've actually had a couple of presentations last week and we're getting the books out to qualified buyers. Look, it's kind of a give and take, if you will, push/pull, it's a little bittersweet. Frankly, we don't want to sell this business. This is a strong growth business for us.

And if you see what Hello Sunshine got, if you believe some of the fuzzy math, $900 million, we primarily sold that right on the backs of six shows, that's it, three hits, six total shows, and three more in the pipeline, where Endeavor Content has 15 hit shows and hundreds of projects development, greenlit or actually in casting or production right now. So we're bullish about the price we can command, the management team we have, the residual value we are connected to with these projects, the ownership of these projects moving forward, which is why we seriously don't want to see it go. But at the same time, we'll stay on board, we'll have 20%, we'll retain that.

It'll be a great option for our clients and we'll ultimately pro forma the financials for next year, so that there won't be any change for this year, which you see s for this year, the guidance will include Endeavor Content all the way to the end of the year. It'll be next year where we ultimately pro forma and out. But we'll see what happens with the process, but clearly, we're bullish about the asset.

[Jason Lublin, Chief Financial Officer]

Yes. On the deferred revenue piece, I would say that, that balance is associated with Mark -- with what Mark just talked about our Endeavor Content business and building up before we make deliveries, and also on the event side of our business and On Location side any pre sales for events that have not taken place yet.

[Jason Bazinet]

Perfect. Thank you. On shares, do you mind just spending a second on that?

[Jason Lublin, Chief Financial Officer]

Yes, well, what's the question on the shares?

[Jason Bazinet]

It's just the fully diluted share count was, I don't know, about 100 million lower than I think with the consensus that we had in our model. And I think it has something to do with the Class A equivalence not being converted, I just want to confirm that that's what happened in the quarter?

[Jason Lublin, Chief Financial Officer]

Yes, let me follow up with you, and then -- I don't have the model in front of me, and we'll get back to on that.

[Jason Bazinet]

Very good. Thank you.

[Jason Lublin, Chief Financial Officer]

440 million outstanding based on our market cap.

[Operator]

Next question comes from the line of David Joyce from Barclays.

[David Joyce]

Thank you. A couple of more questions on UFC and one representation if I can. On UFC, how is the second half events line up pacing compared to the second half of 2019? And as part of that, is there a sort of a maximum optimal number of Pay-Per-View events that you would plan to put on to avoid potential dilution of intention -- attention or engagement? And then secondly related to UFC and your comments about how strong your international young demographic is, are you seeing competition from other MMA sports that are babies seeking new capital sources or joint ventures to try to bulk up their presence in the MMA world, and just wondering how that was impacting you? Thanks.

[Mark Shapiro, President]

Hi, David, it's Mark. I will try and hit all of these, appreciate the questions. First of all, let's start with the competition. No, the answer is no. We're not looking to band with anybody. We're not looking at JVs. We don't need any more dry powder. We're in a very strong cash position, and frankly, our cash won't be spent on MMA acquisitions. The UFC is paramount. It's the trophy asset and it's going to stay that way. We love the competition frankly. I mean it drives -- is it Dana White needed any more octane in his bloodstream, if you work with this man, and a rising tide lifts all boats, whether the USFL and the XFL with the NFL, the Continental Basketball Association with the NBA, Major League Soccer and what's that done, which is none -- not -- no impact whatsoever in terms of European Soccer, or PFL.

Remember that PFL, Pro Fighters League is on ESPN. In fact, they use the UFC to promote the PFL. So, come one, come all, anything that grows the MMA Sport, the combat sports area serves to our benefit. So we look forward to more of that to come. I think in terms of Pay-Per-Views, we would just mention, generally, we do one a month, we do one Pay-Per-View a month. So you can expect an annual calendar basis, we're going to do 12. This year, we have 13 Pay-Per-Views scheduled. We're going to do, and it was in our numbers, a 14th event this year, which we have decided to move that event just in order to keep our quality at the level we want to keep at and then it also fit the dates and also ride out this pandemic a little, we're going to move that 14 Pay-Per-View to next year to give us 13 for next year. So we're raising guidance on revenue and EBITDA, obviously, in the face of this pandemic and where it's going, but also with one less UFC Pay-Per-View than we had planned.

[David Joyce]

And if I could on the representation side, given there are different product types, revenue streams there, how does the timing and revenue mix impact the ultimate margins since the margins were being kind of stronger than expected here this quarter, even with some delays in deliveries that you've mentioned?

[Jason Lublin, Chief Financial Officer]

Yes. So we're going to have margin variability from -- within segments and from quarter-to-quarter depending on revenue shift -- revenue mix and revenue shift. So that's why we really focused on looking at the business annually and we focus on our annual guidance, we're at the midpoint -- what we're -- we're pushing 15.9% margin. So it will shift quarter-to-quarter between segments based on the makeup of the revenue for each business line.

[Samanta Stewart, Senior Vice President & Head-Investor Relations]

All right. With that, thank you, everyone, and we look forward to talking to you next quarter. Thank you, operator.

[Ari Emanuel, Chief Executive Officer]

Thanks.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.