Liberty Live Holdings, Inc. Series C Liberty Live Group Common Stock 2026 Q2 Earnings Call

Please go ahead. Thank you for joining us this morning.

This call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the most recent Forms 10-K and 10-Q filed by Liberty Media with the SEC. Liberty Media expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Liberty Media's expectations with regard thereto, or any change in events, conditions, or circumstances on which any such statement is based. On today's call, we will discuss certain non-GAAP financial measures for Liberty Media, including Adjusted OIBDA, constant currency for MotoGP.

The required definitions and reconciliations for Liberty Media Schedule One and MotoGP Schedule Two can be found at the end of the earnings press release issued today, which is available on Liberty Media's website. Speaking on today's call, we have Liberty's President and CEO, Derek Chang; Liberty's Chief Accounting and Principal Financial Officer, Brian Wendling; Formula One's President and CEO, Stefano Domenicali; MotoGP CEO, Carmelo Ezpeleta, and other members of management will be available for Q&A. With that, I'll turn it over to Derek.

Great. Thank you, Hooper. Good morning, everyone. We are thrilled with the second quarter performance at both F1 and MotoGP. Amidst all the global uncertainty, Credit to our operating teams in this challenging environment, our businesses are motoring along at a speedy pace. Our priorities for 2026 remain unchanged, which are to build upon Formula 1's durable business model, establish the foundation for MotoGP's next phase of development, and allocate capital with discipline. Since May, we have made tangible progress against each priority while keeping the distinct identity of each sport at the center of our approach. Formula One continues to demonstrate the breadth and durability of its platform. New technical era is producing compelling competition on track. There is immense demand from fans, promoters, commercial partners, and media platforms. Meanwhile, our business continues to perform incredibly well, with notable momentum across Paddock Club, licensing, and sponsorship.

In the U.S., Formula 1's momentum on Apple continues to build with viewership up year-over-year, season-to-date, and total hours watched up 13%. We could not be more pleased with this result. The digital product is great, and sponsors across the F1 ecosystem are very happy with our distribution on Apple. This season, F1 has attracted a much younger and more female audience in the U.S. on Apple TV. Our experience with Apple continues to reinforce the strategy of pairing premium live coverage with product innovation and broader ecosystem breadth without compromising reach. Through Apple's ecosystem, F1 is being amplified, discovered, and embraced by a new generation of fans, and we couldn't be more excited to see what this partnership will bring to our sport in the coming years. We are also creating more direct and frequent relationships with fans.

Original content, licensing, and experiential activations are extending engagement beyond race weekends. For example, Passenger Princess, which in its first season generated close to 300 million views, returned for a second season last month. The Las Vegas Grand Prix 10-year extension through 2037 is a milestone that underscores F1's growing U.S. presence. At MotoGP, we are beginning to capitalize on the significant opportunities ahead, and we are very happy with our progress so far. The racing this season has been exceptional, with incredibly tight competition among the top five riders. More importantly for the long term, MotoGP completed agreements with all manufacturers and teams through 2031. Together with new technical regulations beginning next year, this establishes a stable framework for investment, promotion, and commercial growth. We continue strengthening the organization, including progressing on key hires and building commercial capabilities while pursuing growth in ways that are authentic to MotoGP.

There is positive momentum in the business with new media agreements signed in Spain and Portugal and the extensions of the Malaysian and Silverstone Grands Prix. Fan activations, like the 20,000-person immersive watch party in London in June, broaden access and visibility and underscore our priority of bringing the MotoGP experience closer to city centers. Our capital priorities at the Liberty level remain to support attractive organic growth, maintain a prudent balance sheet, and evaluate opportunities that complement our existing assets. Brian will cover the financial results in more detail, and Stefano and Carmelo will discuss the operating businesses. Our confidence remains high in the durability of Formula One's growth and their increasingly direct and always-on fan relationships. Likewise, we continue to feel very excited by MotoGP's long-term potential as its organizational and commercial foundation takes shape. Now I'll turn it over to Brian.

Thank you, Derek, good morning, everyone. We'll start with the Formula One business. The race count this quarter is especially challenging due to not holding the Saudi and Bahrain GPs in April, and other differences in the calendar resulting in a 44% decline in the race count for the quarter and a 27% decline year-to-date. With that in mind, I'll focus on year-to-date comparisons, and as always, it remains best to focus on our business on a full-year basis. Absent the calendar variability, the business is performing incredibly well. Results reported year-to-date reflect a 22 race calendar, the number known at June 30. Subsequent to the end of the second quarter, we have rescheduled the Bahrain GP, which will be held in Malaysia in October, bringing our expected race count to 23 races for the year.

We expect to start accruing season-based revenue costs and associated true-ups with respect to a 23 race calendar starting in the third quarter of this year. No additional 26 calendar changes may be necessary. We expect to return to a full 24 race calendar next season. The second quarter of 2026 held five races compared to nine races in the second quarter of last year. Year-to-date through the second quarter, F1 also had three fewer races, with eight races held in the current year-to-date period, compared to 11 races held in the prior year. Year-to-date, revenue declined 15% and Adjusted OIBDA declined 30%, driven by the change in race count. The decline in primary revenue was driven by the calendar variance and its effect on recognition of season-based revenue.

With 8 out of 22 assumed races staged year-to-date, with approximately 36% of season-based revenue recognized compared to the prior year period, when 11 out of 24 races had been staged and approximately 46% of season-based revenue had been recognized. During the second quarter, media rights revenue was also impacted by the one-time revenue associated with the release of the F1 movie last year. Offsetting the decline was underlying contractual fee increases at our three primary revenue streams and revenue generated from new and renewed sponsorship partners. Other revenue declined due to lower hospitality and freight revenue from three fewer events held year-to-date and lower F3 revenue due to the sale of cars at the beginning of the new F3 cycle last year.

Partially offsetting decline was strong demand for the Paddock Club at recurring events, continued growth in our licensing business, and growth in the Grand Prix Plaza activities in Las Vegas. Adjusted OIBDA decreased year-to-date because of the lower event count. The revenue decline discussed above outpaced the decline in expenses. Decreased operating expenses included lower team payments and expenses related to the delivery of hospitality offerings, travel, freight, and other costs due to the calendar variance. SG&A expenses increased driven by higher personnel and information technology costs, partially offset by lower marketing costs as we lapped the 75th season launch event last year. Team payments as a percent of pre-team share Adjusted OIBDA were 61.7% year-to-date and were also accrued based on a 22 race calendar assumption.

For the full year, we still expect to see roughly 200 basis points improvement in leverage on this metric, in line with the average that we've seen over the past four years. After 2026, for the remainder of the term of the new Concorde Agreement through 2030, we expect the payoff percentage to remain relatively stable. Team payments are best analyzed on a full year basis due to quarterly fluctuations in team payments as a percent of Adjusted OIBDA. Now turning to MotoGP. A reminder that we closed the acquisition on July 3rd of 2025, so our financial results prior to the date of the acquisition are presented on a pro forma basis, so the transaction occurred on January 1, 2024. The majority of MotoGP's revenue and costs are EUR denominated and as such are subject to translational impacts from foreign exchange fluctuations.

I will focus on constant currency results here. Similar to F1, I'll also focus on year-to-date comparisons. Year-over-year comparisons are impacted by the mix of races, not just the number. As a reminder, MotoGP flyaway races generally carry higher costs, including freight, travel, and IRTA fees. MotoGP race count itself was identical year-over-year for both the quarter and the year-to-date periods. Revenue increased at MotoGP year-to-date, driven by growth in race promotion from event mix and sponsorship revenue due to new sponsors and underlying contractual growth. A reduction in contractual media rights and a decline in title sponsorship revenue related to event mix partially offset that revenue growth. Adjusted OIBDA also grew year-to-date, driven by both revenue growth and a decline in expenses.