Formula One Group (FWONA) Q3 2026 Earnings Call Transcript

Operator: Welcome to Liberty Media Corporation's 26 Third Quarter Earnings Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. Reminder, this conference will be recorded. Today, November 5. I would now like to turn the call over to Hooper Stevens, Senior Vice President of Investor Relations. Please go ahead.

Hooper Stevens: Thank you for joining today's call. This call today will include certain forward looking statements within the meaning of Private Securities Litigation Reform Act of 2000. 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. These forward looking statements speak only as of the date of this call. And Liberty 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'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 Liberty Media, including adjusted OIBDA and constant currency for MotoGP. The required definitions and reconciliations for Liberty Media, can be found on Schedule 1 in MotoGP on Schedule 2. are at the end of our earnings press release issued today, which is available on Liberty's website. Speaking on today's call today, we have Liberty's President and CEO, Derek Chang; Liberty's Chief Accounting and Principal Financial Officer, Brian Wendling; Formula 1's president and CEO, Stefano Domenicali, MotoGP's new deputy CEO, Carlos Ezpeleta; other members of management will also be available for Q&A. With that, I will turn it over to Derek.

Derek Chang: Thank you, Hooper, and good morning, everyone. Big day here at Liberty, so let's get started. Our operating businesses are performing incredibly well. And had a great third quarter. Our goals at Liberty Media remain unchanged. As we continue investing behind 2 iconic franchises. And as you saw this morning, we also completed a significant transaction with Dr. John Malone. I will touch on Formula 1 first. The underlying business is performing incredibly well, and we continue to see demand for Formula 1 running ahead of what we can supply. We successfully staged the Bahrain Grand Prix in Malaysia and achieved record attendance levels. Brian will take you through the quarter and the calendar mechanics, I would like to applaud our team for its nimble response to a very dynamic and at times challenging year. We also raised for the first time in Madrid at a brand-new circuit and sold out in year 1. We are expanding the Sprint format to 10 races next year while protecting its scarcity. And just a few weeks ago, we announced that we will return to Africa with a race in Rwanda starting early next decade. Bringing our racing to every inhabited continent. And a huge congratulations to Kimi Antonelli on winning his first championship to Alexandra and Charles who welcomed their new baby daughter, Bianca, just this week. Madrid showed us firsthand how Formula 1 races have the potential to transcend from a pure sporting event to an entertainment and business showcase. The circuit's proximity to a global city its premium hospitality offerings, broad range of F1 and team activations throughout the weekend make it a compelling destination. The race weekend is transformed into a broader cultural experience that drives meaningful impact across the city beyond the track. When I think about where this goes over time, I can see Madrid evolving the same way Singapore and Abu Dhabi have. Namely a place where sport, spectacle, business, and entertainment intersect. We are continuously developing new ways to expand our sport. Whether that is bringing F1 live to Milan next year, building out our licensing business, are investing in our people and facilities. We are excited about F1's financial growth trajectory. Turning to MotoGP, I feel confident that we have laid important building blocks to accelerating the sports growth in 2027. With the teams and manufacturers' agreement signed this summer, extending out through 2031, we now have a stable framework to co-invest and collaborate together to grow the sport. This quarter, we strengthened the organization by promoting Carlos Ezpeleta to Deputy CEO and adding new senior executives with deep media and sports experience. Carlos will speak in more detail about the new management team, but these appointments represent an important step forward accelerating MotoGP's growth and realizing the sport's tremendous potential. I am looking forward to welcoming these impressive individuals to MotoGP. And supporting them in executing their priorities. Also, during the Formula 1 weekend in Austin, MotoGP put bikes and riders on the circuit in front of the F1 crowd promote its own race there next April. It is the first time we have put 1 sport directly in front of the other's audience, maintaining the authenticity of both sports. Through the on track demonstration and Paddock Club presence, MotoGP reached a sold out crowd of 467 thousand F1 fans at the Austin GP and generated over 50 million impressions online across MotoGP and F1 digital platforms. At the Liberty level, I am pleased to announce that Phillip Blek joined us from Cravath in October. As our new Chief Legal Officer. I would like to thank Renee Wilm for her years of service with Liberty. This morning, also announced that we have acquired all shares of Liberty Media's high vote Series B common stock held by Dr. John Malone and certain related entities. In exchange for shares of Liberty Media's low vote Series A common stock and no vote Series C common stock. As a result of this transaction, John's aggregate voting power declined to approximately 3%. The transaction provides better alignment of voting power and economic ownership for our shareholders while simplifying our capital structure. I would like to thank John for working closely in construction constructively with the company on this transaction. In addition to being an American business legend, he has served as a leader, mentor, and partner to many of us, including myself. John just reiterated to me the other day he is very supportive of management and is optimistic about the growth prospects for our businesses. While we now have a different corporate structure, we look forward to continuing to be able to lean on his wisdom and advice. In closing, I remain confident in the growth trajectory of both our world class assets excited for all to come. With that, Brian will take you through the financials, and then Stefano and Carlos will cover the operating businesses.

Brian Wendling: Thank you, Derek, and good morning, everyone. I will start with Formula 1 as always. Just a reminder, I would like to focus on year to date comparisons and remind you that it remains best to focus on our business on a full-year basis. Calendar changes continue to be the theme this quarter. But the underlying business, as Derek said, continues to perform incredibly well. As you may recall, results for the first half of the year recognized season-based revenue and costs with respect to a revised 2022 race calendar, the third quarter, we rescheduled the Bahrain Grand Prix, which was held in Malaysia in October. And that brings our expected race count up to 23 races for the year. For the third quarter, we have therefore realigned proportionate recognition of season based revenue in costs with that current 2023 race expectation. With numbers reflecting the accounting required to have recognized fifteentwenty 3 or 65% of those season-based revenue and costs through September 30. Note that additional 2026 calendar changes may be made as we move through the year. We expect to return to a full 24-race calendar next season in line with the published calendar. The third quarter of 26 held 7 races compared to 6 races in the third quarter of 25. Year to date, F1 held 2 fewer races with 15 races held the current year to date period compared to 17 races held last year. Year to date revenue was relatively flat despite the lower race count and adjusted OIBDA declined 5%. Driven by that calendar variance. A decline in primary revenue was driven by lower rates promotion and media rights revenue. And the reduction in rates promotion revenue was due to the calendar variance, again, with 2 fewer races held, while media rights revenue was impacted largely by the onetime revenue associated with the release of the F1 movie last year. Media rights revenue was also impacted by the effect of the calendar variance on the recognition of season-based revenue with 15 out of 23 races staged year to date or approximately 65%. Versus 17 out of 24 races last year or 71% of season-based revenue. These decreases were largely offset by underlying contractual fee increases and strong sponsorship growth. Other revenue increased due to growth in hospitality revenue strong demand for the Paddock Club. Continued momentum in the licensing business and growth in activities at Grand Prix Plaza. Partially offsetting this increase was lower F3 revenue due to the sale of cars at the beginning of the new F3 vehicle cycle in 2025. Adjusted OIBDA decreased year to date because of the revenue fluctuations and increased expenses. Increased operating expenses included higher expenses related to the delivery of hospitality offerings, associated with the Paddock Club, commissions, and partner servicing costs associated with the strong underlying revenue growth and increased race promotion and higher FIA fees. as well as freight costs. Selling, general and administrative expenses increased driven by higher personnel and information technology costs, partially offset by lower marketing costs driven by the nonrecurring 75th season launch event last year. Team payments as a percentage of pre team share adjusted OIBDA were 58.7% year to date and were approved proportionately based on the 23-race calendar assumption. For the full year, we still expect to see roughly 200-basis-point improvement in leverage on this metric in line with the average we have seen over the past 4 years. After 2026, as a reminder for the remainder of the term of the new Concorde through 2030. We expect that payout percentage to remain relatively stable. Team payments are best analyzed on a full-year basis due to quarterly fluctuations in team payments as a percentage of adjusted OIBDA. Now flipping over to MotoGP and a reminder here that we closed the acquisition on July 3rd of last year. So our financial results prior to the date of acquisition are presented on a pro forma basis as though the transaction had occurred on 01/01/2024. The majority of MotoGP's revenue and costs are euro-denominated and as such are subject to translational impacts from foreign exchange fluctuations. In the following discussion, will focus on constant-currency results and similar to Formula 1, I will also focus on year to date comparisons. Year over year comparisons are impacted by the mix of races, not just the number, and a reminder that MotoGP flyaway races generally carry higher costs. That includes freight, travel, and per diems. The third quarter of 26 held 5 races compared to 7 races in the third quarter of 25. Year to date through the third quarter, MotoGP also held 2 fewer races with 15 held in the current year to date period compared to 17 races held in the prior year. Period. Revenue decreased at MotoGP year to date driven by a decline in race promotion from holding 2 fewer events. A reduction in contractual media rights revenue and a decline in other revenue due to MotoGP's new hospitality agreement with Quint whereby MotoGP now recognizes hospitality revenue and costs on a net basis. Partially offsetting this decline was underlying contractual increases in race promotion and sponsorship revenue. Adjusted OIBDA also declined year to date driven by the reduction in revenue. Cost of MotoGP Motorsport revenue did decline due to the impact of 2 fewer races held, which resulted in lower IRDA, organizational and freight expenses as well as the lower hospitality costs associated with the new hospitality agreement with Quint. Looking briefly at corporate and other results. Year to date, revenue was $18 million which relates to rental income generated by Grand Prix Plaza in Las Vegas, Corporate and other adjusted OIBDA was a loss of $36 million this includes the Grand Prix Plaza rental income as well as corporate expenses. At quarter end, Liberty Media had cash and liquid investments of approximately $2.3 billion which included $1.3 billion of cash at F1 and $199 million of cash at GP. The total principal amount of Liberty Media's debt was approximately $5.5 billion at quarter end. Which included $3.3 billion of debt at Formula 1 and $1 billion of debt at MotoGP with $1.2 billion of debt at the corporate level. In August, Liberty Media issued $690 million aggregate principal amount of new convertible notes due 2032. And the proceeds were used to repay the 2.25% convertible senior notes in 2027 as well as we purchased a cap call that will fund additional costs associated potential costs associated with the 2027 convertible notes and for general purposes. F1's $500 million revolver and Moto GP's €100 million revolver both remain undrawn. And at quarter end, Liberty Media's net leverage was 3.0x. Formula 1 and MotoGP are both in compliance with their debt covenants at quarter end. And with that, I will turn it over to Stefano to discuss Formula 1.

Stefano Domenicali: Thanks, Brian. What an incredible season we have had so far. After a 3-way championship battle so far this season, want to congratulate Kimi Antonelli on becoming the youngest driver in Formula 1 history to win the driver's championship. And also congratulate his Mercedes team who are poised to win the constructor championship. I also want to applaud Red Bull and Ford on their fast victories together under the new partnership in Formula 1. We expect the great racing to continue as we head into the final races of the season with a number of drivers battling to finish 2nd and the teams pushing hard to secure their position in the constructor championship. The incredible level of competition continues to translate directly into strong fan engagement. Season to date through Austin, we have welcomed 5.8 million fans and had 18 consecutive sold out event with 11 races setting new attendance records. Audiences are up Our social channels continue to grow, and the feedback from our fans in our surveys has been overwhelmingly positive. Reflecting both the quality of the racing and the drama of the storylines week after week. I am proud to say that we again demonstrated F1's ability to solve challenges by successfully staging the Bahrain Grand Prix in Malaysia. And the event was a resounding success reflecting the resilience of our business model and the incredible ability of our teams and partners to find creative solution to ensure we can go racing. In fact, it was the biggest Grand Prix attendance ever at Sepang, drawing 261 thousand fans. I want to again thank his majesty, the king of Bahrain, his royal highness prince Salman, his majesty, the king of Malaysia, and their respective governments. Together with the president of the FIA and our promoters, for their continued partnership and flexibility during a dynamic year. I will also note that the disruption we experienced in The Middle East this year does not change our long term regional strategy and ongoing partnership with our promoters. This year, we currently remain scheduled to complete our calendar this season, and at this stage continue to plan to finish the season in Qatar and Abu Dhabi. We will continue to monitor the situation, and as always, the safety and security of everyone in the sport will remain our first and foremost priority. We remain committed to bringing Formula 1 to fans everywhere, and we continue to expand both the race itself and our geographic footprint to make that happen. Looking further ahead, we recently announced several exciting additions to our 20 seventh calendar and beyond. We are kicking off the 2027 season with the F1 Live, an expanded format of the event in London in 2025. The week long activity will take place in Milan, with 3 core components, including our Formula 1 showcase, an F1 Festival, and a live show. We look forward to sharing more details soon. In 2027, we will see an expansion of our sprint format to 10 Sprints, up from 6 this year. The format continues to add excitement to our events whilst providing valuable additional inventory and commercial opportunities for our partners. We are also thrilled to welcome Portugal and Turkey back to the calendar next year. Giving our sport the opportunity to reach new fans. We recently announced a landmark 10-year agreement to bring the Formula 1 African Grand Prix on the calendar in the early 2030s. These race will mark our return to the African continent for the first time since 1.99 thousand. We have always seen Africa as an important part of Formula 1's future. But we are determined to return in the right way. With the right partner, and with a long term commitment and clear vision for creating meaningful impact. With Rwanda joining the calendar, the near future, we will be racing on every inhabited continent in the world. Africa is estimated to be home to more than 100 million Formula 1 fans already, with almost 60% of fans in key Sub Saharan markets under 35. So the long term growth opportunity here is enormous. I want to thank his excellency president Paul Kagame, the government of Rwanda, the Rwanda Development Board, and the FIA president Mohammed Ben Sulayem for their partnership in securing this opportunity, and we could not be more excited about what this means for the future of F1. Turning to fan engagement, Growth in global TV audiences continue in the third quarter. With several events, including the Italian and Dutch events showing, double digit percentage growth. Our social digital platform continued to thrive as well. We grew our social media following to 129 million, up 16% year over year, and our total YouTube views have now surpassed 1.7 billion, up 30% year over year with 75 million hours of watch time. Our YouTube highlights views reached 270 million. up 25% year over year with the 16.2 million hours watched. Diving into more details around our business. Momentum continues to accelerate in our hospitality business. Looking ahead to next year, our 2026 Paddock Club sales will commence in early November. We already seen great momentum with an increase in team and customer request. We expanded our premium hospitality offering launching with LVMH, a new dining experience. The Out Lap. In Belgium, The Netherlands, Monza, and Madrid. And after successful launch, we plan to make it available at all our European races in 2027. Our collaboration with Soho House and Lewis Hamilton House 44 also continued to be a standout success as well and will grow from 9 locations this year to 13 in 2027. Austin also hosted the second iteration of our Gordon Ramsay-themed F1 Paddock experience as well as the debut of the Paddock Bar by F1, at the iconic downtown Sagebrush venue. The Paddock Bar by F1 was an off track experience in the heart of Austin, and I like the way in which we are expanding the race weekend experience beyond the track and for our fans. The race itself generated over $1 billion in economic input for the city this year. We have also continued to expand our partner collaboration capacity. In Monza, we added the Paddock Collaborate extension, increasing capacity by 15%. And in Austin, we opened a brand new Paddock Club space within Turn 1 increasing our capacity also by 15%. With demand so strong, we are also exploring opportunities for adding Paddock Club capacity in 2027 at China Silverstone, Austria, and several other races to meet this growing demand. We are also gearing up for the Las Vegas Grand Prix in 2 weeks time. And this year progress has been phenomenal. Ticket revenue, including hospitality, is pacing ahead and the sponsorship has already surpassed 2025 levels. We are bringing the whole city to life. with programming across the race weekend. Kicking things off with our second F1 business summit and closing the event out with our sphere after party featuring the back street Boys. Looking ahead, the Las Vegas Grand Prix remains a key, not just to our local community partners for which it has generated over $3 billion in cumulative economic input so far. But to our US brands and growth strategy as well. Our licensing continues to build momentum with new agreement signed including Leica, where, together, we are going to be launching a bespoke F1 edition to much-acclaimed camera globally. We also extended our Disney partnership throughout 2028 and are now included Disney and Pixar Cars under the expanded partnership. This quarter, we opened 3 additional F1 flagship stores plus new off-track F1 hubs at the Austin race and in Mexico. The expansion of our F1 Hub underscores our new philosophy of getting deeper into the city in which we race and it is a popular fun activation. Nucleus will continue to support our overall retail sales growth. In Austin, we saw record breaking levels of merchandise sold, In gaming, we built upon our existing licensing partner with Mattel announcing a gaming collaboration to integrate the F1 Hot Wheels cars into the Hot Wheels Infinite Loop video game. Releasing next year, the game will feature all 22 official F1 cars. I am also proud to share that our licensed traveling F1 Exhibition won the best touring exhibition award at the GXG award in Madrid this October. Which is a significant industry wide recognition. The exhibition has now visited its 11th city and 4 continents, with more than 2 million tickets sold to date. Commercially, we have continued to make great progress, also extending our media rights relationship with DAZN in Spain, Portugal, and Andorra through 2030, renewing LIQUI MOLY sponsorship in a new multiyear agreement. We are more excited and excited for what is to come as we head into the year end. While there remain a strong momentum across every part of our business, we believe Formula 1 has an exciting growth journey ahead and we are more confident than ever that the foundation we continue to build today will drive enduring value for our partners and stakeholders for the years to come. Avanti Tuta, full speed ahead. And now I will turn the call to Carlos to discuss MotoGP. Ciao.

Carlos Ezpeleta: Good morning, and thank you, Stefano. MotoGP Group is entering a period of transformational change. We are pleased to continue that journey with the support of Liberty Media. The sport is in a fantastic place with another season of close competition and incredible racing. Vision for growth remains the same, to share MotoGP's raw energy and defiant spirit with the world through compelling storytelling, world class racing, and cultural moments that extend our reach far beyond the track. We have made tangible progress laying the foundations to accelerate our sports growth. In September, we strengthened our executive team with an impressive slate of new leadership hires, including new chief commercial, operating, and media officers amongst others. These appointments build on the addition of Vince Russell as chief financial officer earlier this year. Like to spend a moment discussing our updated organizational structure. Danielle Vasanova joined us in September as chief strategy officer. Bringing 2 decades of strategic leadership experience across finance, sports, and entertainment, most recently with UFC and TKO Group Holdings. And joining us in January 2027, we have Louise Young, who has been appointed as chief operating officer following more than 8 years with Formula 1, most recently as chief race promotion officer. Bringing deep experience in working with promoters, circuits, governments which will be invaluable as we expand our global calendar. Chief commercial officer Ryan Norris will join MotoGP from Tottenham Hotspur to oversee partnership sponsorship, licensing, hospitality, marketing, and digital. Samir Pabari will become chief media officer. Having previously held senior leadership roles at the NFL Warner Brothers Discovery, and Manchester United. In addition to being responsible for our media rights operations, he will also oversee the commercial growth of Motor GP's direct to consumer streaming service. Together, this team brings proven experience scaling some of the most successful properties in global sports and entertainment. And I am excited to have them on board. The strength of the sporting product has never been clearer. This season has delivered extraordinary racing, unpredictable storylines, and fierce competition across the grid. As we approach the final rounds, Marc Marquez is on the verge of another historic championship win. But the real story has been the depth of talent and competitiveness throughout MotoGP, which continues to set the benchmark for racing worldwide. That competitiveness has supported strong fan engagement both on and off track. Season to date through Indonesia, 5 races have set new circuit attendance records. Our digital and social momentum also continues to build. We ended the quarter with 63 million total followers across platforms. TikTok delivered standout growth with engagement up over 60% and viewership up over 40%. Looking ahead, we will launch our 2027 season launch in Rio De Janeiro with a spectacular celebration that brings our sports directly to the heart of the city. We are planning a bike exhibition along Botafogo Beach bringing together every rider, team, and manufacturer in front of a global audience. The program will also feature internationally acclaimed artists leading Brazilian musicians and entertainers. Celebrating Ria's vibrant music scene and creating a true festival atmosphere for our fans. Now in its 30 year, our season launch event has become a defining moment in our calendar and a powerful global showcase for our sport. We also announced a new race weekend format starting next season designed to make the on track action even more exciting for fans. Spring qualifying will become its own separate session. With Qualifying 1 and Qualifying 2 moving to Saturday morning, The new structure is built to make the weekend easier to follow while ensuring each day delivers its own meaningful sporting outcome. We believe this will create additional storylines throughout the full race weekend, make the format more intuitive for new fans, and further support our ongoing commitment to safety. By creating a clearer and more balanced competitive schedule for riders and teams. On the team side, this has been 1 of the busiest transfers windows in recent memory with a total of 17 rider movements out of 22 riders as teams finalize their 2027 lineups. The MotoGP grid will also welcome 5 new riders next season. Including Moto 2 graduates Daniel Holgado, Yifan Guevara, David Alonso, and Senna Agius, as well as reigning world superbike champion, Nicolò Bulega. The influx of young and exciting talent underscores the strength of our rider development pathway and reinforces confidence in the long term future of the championship. A key part of our growth strategy is taking MotoGP to new audiences. Through complementary sports entertainment platforms. Recent examples include our activation alongside FIBA and Misano and our first ever presence at a Formula 1 weekend during the U.S. Grand Prix in Austin These initiatives create meaningful opportunities to showcase MotoGP to highly engaged sports fans, expand our reach, and drive greater awareness of the championship in markets around the world. On the business side, we also had a productive quarter with several new and renewed partnerships. In media rights, we renewed our partnership with DAZN, Kayo Sports, and Fox in Australia in a new multi-year agreement beginning in 2027. Within race promotion, we revealed the impressive Adelaide track layout. The promoter has received environmental approval for the circuit works and we are also thrilled to announce that Red Bull will become the title sponsor of the Australian Grand Prix starting next season. We extended our agreement with Portugal for another 3 seasons through 2029 and also renewed Mugello home of the Italian Grand Prix for another 5 years through 2031. We are proud of the progress we have made this quarter and look forward to updating the investor community. Now I will turn the call back over to Derek.

Derek Chang: Thank you, everyone. We appreciate your continued interest in Liberty Media. And with that, we will open the call up for Q and A. Operator?

Operator: Thank you. And the first question comes from the line of Bryan Kraft with Deutsche Bank. Please proceed.

Bryan Kraft: Hi, good morning. I wanted to ask, given today's announcement, regarding Dr. Malone, Would the company consider collapsing the Series A and Series B classes into a single class of stock all having 1 vote per share. If this is no longer going to be a controlled company, why continue to have the As and the Cs outstanding? And just wondering if there is anything specific that would prevent you from doing that. Thanks.

Derek Chang: Thank you, Brian, for the question. This transaction was obviously designed to take care of John and his b shares as we, as he transitions on some of the stuff on the personal side for him. It is not. Was not meant to do anything more than that. That being said, we as a company as you rightly point out, we will continue to evaluate what the optimal capital structure is and governance structure. And that is something that we will continue to do. And look to optimize that. Okay. Thanks. Operator, next question please.

Operator: The next question comes from the line of Sean Diffely with Morgan Stanley. Please proceed.

Sean Diffely: Great. Thanks very much. 2, if I may. The first on the Malone transaction, I was wondering if you could provide any color on the comment that John received a number of unsolicited offers from third parties and then your rationale for the rights plan, which expires in November 2027? And then on the business, nice upside in the F1 other revenue line versus our estimates. I am guessing it was driven by hospitality and maybe helped by Madrid but also licensing. Any further detail or sizing you could provide for us there? Thanks very much.

Derek Chang: Sure. Thanks, Sean. So on your question, and John receiving offers, as you might imagine, I think probably from time to time, John received offers because he obviously controlled a significant set of votes with a relatively low economic interest. We will not comment any further on specifics of that. We did get into a situation where it then made sense for as we have already pointed out in the press release made sense for us to go ahead and work with John on a constructive solution that helps us you know, effectively control our own destiny forward and I think that worked out well. I think everyone's very pleased with how this transaction ended up. On the. What was the second piece of that question? Sorry. The rights offering? The rights plan? Obviously, yeah, as the complexion of the governance has changed, from John holding such a significant portion of the votes in 1 place to you know, a bit more. I mean, we still have a 2 class share structure even without the b's. And I think as we look to promote stability in the near term, through this transition, thought the rights offering was the right thing to do. As we know, as I was answering Brian's question, as we look to optimize what the capital structure is. I think on the last question on the business front, with respect to the other revenues, I will hand that over to Brian.

Brian Wendling: Yeah, Sean. The main drivers, as you rightly point out, are our hospitality and licensing. Madrid is 1 of the larger paddock clubs on the circuit, so that was a nice uptick in hospitality. But we also. You have seen growth in hospitality throughout the year at a lot of our other locations as well. So impacted by Madrid certainly favorably, but spread across the rest of the races. Licensing still performing strong. Those 2 then are offset by the F3 engine cycle from last year where we had engine sales in the prior year that we do not have this year. And then the Grand Prix Plaza activities at LVGP have been growing this year versus the prior year. Those are the main drivers.

Sean Diffely: Thanks very much.

Operator: The next question comes from the line of David Karnovsky with JPMorgan. Please proceed.

David Karnovsky: Hey, thanks. Maybe just following up on the transaction, Derek. Does this change anything from your perspective on how you think about go forward capital allocation target leverage, just other Liberty-level matters. And Brian, are there any outstanding B shares or B share options following this?

Derek Chang: Yeah. So, David, I do not think I think to answer your question, we are still focused primarily on growing the businesses that we have. And as we have stated previously, investing behind those businesses and the growth plans that they have is probably the biggest priority as we think about other forms of capital allocation. it is it is not that inconsistent at all with what we have said previously in terms of where we might place investments. And, ultimately we are in the process of again, evaluating optimal capital structure, optimal leverage levels. I would say that given the environment that we are in right now, we are probably being cautious in terms of cash. With respect to the b shares, there are 3%, I believe 3%, of outstanding on a fully diluted basis. Yep of these shares. And then from an option standpoint, With what we did with I think there are no options. Left outstanding. Okay.

David Karnovsky: Then just a separate 1 on the cautiousness you just mentioned. I assume that has to do with kind of in the Middle East and the races there. Obviously, there is been a lot of attention. Just be great to kind of hear the latest on how you are thinking about the rest of the calendar, the Imola backup, And then you know, we might as well ask about 2027, given there is some races on the calendar in March and how you think about flexibility just in the calendar and what contingencies you have with the longer lead time?

Derek Chang: Sure. Let me take that and then I can hand that on the upfront side over to Stefano. But the calendar is sort of proceeding along as it is laid out right now. Yeah, we. Given what is going on, we are monitoring the situation. Frankly, on a daily basis. And we will adjust if we need to. First and foremost is safety and security of anyone in either sport, Formula 1 or MotoGP, and that will be paramount. That being said, we have a backup plan as you guys know with respect to formula 1 and as of this patient's at the end of this season and Stefano and team have backup plans for next season too in the event that sort of the situation continues to be outstanding. So with that, let Stefano give you some more detail.

Stefano Domenicali: Well, thanks, Derek. I think that you said exactly where we are. I mean, I think that we have proven, you know, to be, as much as rational as possible and trying to be as always creative and constructive to make sure that the championship is run despite the complexity of the geopolitical situation. And I reiterate once again that, you know, my. our thanks to the His Highness Of Bahrain and the king of Malaysia to allow to have 1 race in place that no 1 would have thought it was to. Was possible. Therefore, that is our commitment. Our commitment is in front of our fans, and our commitment is in front of our partners, sponsors, teams. And together with the federation, of course, as Derek was saying before, we mentioned we are monitoring the situation. And safety first for everyone, but, that is why we were not emotional before and we will stay rational up to the end. And then, you know, we have plans of contingency as you can imagine, on our complexity in terms of logistics, in terms of business administration, in terms of selling is quite important. I think that so far, we have proven to be strong in that respect. Thank you.

Operator: The next question comes from the line of Joseph Stauff with Susquehanna International Group. Please proceed.

Joseph Stauff: Thank you. Good morning, Derek, Brian, First, can you give us an update on Las Vegas Grand Prix and the ticket pacings there? And then a question on Moto. Carlos or Derek or Brian. Can you remind us just in terms of the number of new promoter contracts that take effect in the 27 season? then the 2028 season? Sure.

Derek Chang: Hi, Joe. Let me. I will go in reverse. Because I will turn it over to Brian and then Stefano on the Vegas question. But on MotoGP, in 2027, we have Argentina and Adelaide and Australia coming online. I do not believe at this point we have announced any new ones for 2028. Carlos, is that correct?

Carlos Ezpeleta: Yeah. We have not announced any new events joining in 2028. We have a number of renewals, a big part of the calendar in 2027 are new or renewals entering, into effect in 2027.

Derek Chang: Yeah.

Joseph Stauff: I think I misspoke. I meant to ask on renewals. Sorry about that.

Carlos Ezpeleta: So for renewals, the exact number I have to get back to you, but it is it is probably around 7. 75% of the calendar.

Joseph Stauff: Thank you.

Stefano Domenicali: Then on the. Then With regards to Las Vegas, I could say in a nutshell, the situation is looking to be very, very good. I mean, the. Thanks to the incredible work of Emily Prazer and, all the team there in Vegas. I mean, what, is happening in Vegas in a couple of weeks will be you know, the best for sure in terms of revenue and in terms of cost management. On top of that, that is even more important than that, I think that we were able to have and to build an incredible solid future with all the community of Vegas. The extension for many, many years is because after a difficult start, I think that we have proven to be an asset, not only for the championship, but also for the city. So very proudly, I think that you know, this 1 for you will see the revenue will be high. The cost is contained. And in terms of attendance, will be fantastic. And a lot of quality people will come and to join an incredible event that for many, for many reasons, and that is why it is 1 of the reason why we wanted to organize it ourselves will remain a reference for a lot of things that we are doing for that is well reflected in the growth of the sport in other places of the world.

Operator: The next question comes from the line of Anthony DiClemente with Jefferies.

Analyst: Please proceed. Hey, good morning. Thanks for taking our questions. You have called out the monetization gap between F1 and MotoGP as being a major opportunity to close. Do you foresee that unfolding over the next couple of years? Which revenue streams do you think present the greatest upside and what kind of cadence should we expect on that? Thank you.

Derek Chang: Sure. Thanks, Anthony, the question. Yes, you are right. We have called out that gap, that is the opportunity that we see. I think in the near term, what we are seeing is probably on the promoter side. So the track fees that we are going to get. the race fees, excuse me, that we are gonna be getting from our local promoter. that is probably where you are going to see the increases to begin with. Then as we move forward, I would see us both on the media rights and sponsorship side. You know, that probably does not happen as some of those are longer deals and it takes a while in the sponsorship side like we saw with Formula 1. I think we really hit our stride until, you know, probably 5 years into the business. But as I think I have said previously in other settings, the fact that we are having good conversations was potential sponsors, and they see the same sort of ability to have a trajectory like we had with Formula 1. And they also understand that under liberty, the credibility that we have we have developed because of what is happened with Formula 1 that we may be able to accelerate that in a way that would hopefully you know, start to see some of those increases come sooner rather than later. Great. And can you also provide a little bit of color on the benefits you have seen thus far from the Apple TV deal? And has Apple expressed any interest in bidding on any upcoming contracts outside the U.S.? Thank you. Sure. I am going to actually just let Stefano answer that question, so we do not trip over each other. Find each other. Go ahead.

Stefano Domenicali: Thank you, Yes, thank you. I mean the Apple TV has given us an incredible opportunity you know, to get into the market that we wanted to be effective. to the young fans that we have, so we do not have to forget that in US, our market is 40% male with an average age between 18 and 24. Given the opportunity to get into their habits and culture. They are. We are doing a lot of other things that would be focused to grow and expanding their activity using us altogether to be you know, step by step, get into more on what is the culture of the American sports fans. And this will allow us not only to be focused on the sport, but also being Apple you know, in other dimension, you know, we are hitting the dimensions we are interested in. Lifestyle, entertainment, sport, music. And this is all the things that Apple is very, very strong, and they are very happy as we are about this new deal. On the other hand, the answer is yes. it is because they are really understanding that potentially, and this part of our discussion, if there are opportunities that can build another market they would do it. And because, of course, they see and we can see you know, these effects could be even bigger in the future. Even if as we always said, our strategy is not to have 1 main partner all around the world, is to make sure that we maximize the opportunity that we can have market by market. But once again, yes, they are going to do it as soon as, this opportunity will be, open for them.

Derek Chang: Yeah. Thanks, Stefano. I think to put a better point on it, you know, the affiliation with the Apple brand and the F1 brand. the 2 together are very complementary. And I think that is what, Stefano spoke to in his in his introductory remarks on, sort of, the elevation of the sport into a global entertainment brand. And Apple being part of that is very complimentary. I think then the other part is probably on the product side. Anyone you speak to would say, product does not have. Has probably exceeded expectations. And they continue to think about what innovation will happen and what new innovation could they can add to the product side. And then finally, Apple as a potential bidder in other markets is helpful even if we do not necessarily go with them in those markets. Just tightening the market is helpful from a demand standpoint. Thanks, Anthony. Operator, next question.

Operator: The next question comes from the line of Steven Lee Cahall with Wells Fargo and Company. Please proceed.

Steven Cahall: Thank you. Derek, I was wondering if you could talk about what you are seeing in VIP experiences I know you have added capacity like the Turn 1 Clubhouse at Cota in Austin. Could you help us with what VIP revenue has grown year on year this year? And what sort of capacity expansion you think you can drive over the next few years with more like that? And finally, would you consider breaking out VIP revenue separately? Because I think it is a growth driver of the company that kind of gets lost. Thank you.

Derek Chang: Sure. I think, before we go on that 1 on VIP, 1 of the things I want to also highlight is what we are doing at MotoGP with respect to VIP where working with Quint, we are completely overhauling that product and expect that we will introduce over time here a much higher quality product that will be sort of well received by. So on a on a b to b basis as well as the fans of the sport. So stay tuned there. On the Formula 1 side, I will turn it over Brian on the specifics of any of these numbers, and then Stefano can probably give us better color on more broadly on where the upgrades are happening.

Brian Wendling: Yeah. Specifically on your question, would we ever consider breaking it out? Certainly, if it gets to the size where it is required under SEC rules we would we would break it out. But we have a little bit of ways to go for that. In terms of. I will do a high level commentary, but you know, basically, most of the revenue growth you are seeing in hospitality there are some new areas that are helping to drive that growth, but it is it is largely just due to the Paddock Club Paddock Club growth at most of the venues, we commented earlier, Madrid did come online, and it is a relatively larger paddock club compared to what we had before. It replaced another. So you are seeing growth there. But, yeah, I will let Stefano comment on it. But as the. As we said before, the company's experimenting with House 44, the Outlap, lots of different types of VIP offerings.

Stefano Domenicali: Yeah. Thanks Brian. Steven, yes. I would say the main factor of this is because we wanted to extend our experience for all the fans. And, of course, the more we get into the so called VIP experience, we need to offer services and, things that are not possible to have in other situation. So the fact that we have now more and different product that are diversified and, of course, with different kind of pricing position, is really the things that we saw growing. And that, connected with the fact that having long term deal with partners and promoter allow us to ask their investment in the dimension that we believe is right, always remembering that the quality is an asset for us. And I do not want to be presumptive, but because we have been seen as a reference in terms of in the experiential world in the world of sport business and entertainment platform, we need to keep that focus at the top of our priority, and this will happen in the future. The good news that I can share already is that for the next year, for example, our capacity is almost gone because there is such a request that allow us to push and work on the quality on the offer that we want to give to our fans and to our, guests. Next?

Operator: Thank you. Our next and final question comes from the line of Stephen Nielson with Goldman Sachs.

Steven Lee Cahall: Please proceed. Great. Thanks for taking the questions. On the F1 sponsorship side, Derek or Stefano, just be curious if you could give us an update on where we stand with bringing in some new logos across some of the verticals you called out earlier this year, think, AI, travel, and fitness. And then if I could, longer-term 1, just on the opportunity in Asia. It feels like there is momentum in the region. Would just be curious what you need to see or gain conviction on to maybe lean into the region in a bigger way and when we maybe could expect that to be an opportunity. Thank you.

Derek Chang: Sure.

Stefano Domenicali: Stefano, I will ask Steven. The On the. Yeah. Sure. Sure. Go ahead, Derek. No. No. Go ahead. I am on the sponsors. Stefano. Okay. No. I would say on the sponsorship, I would say. I would like to stay. to use the word, stay tuned because our lab is followed by a lot of things that are positive. And it is not only on the fact that the partners that are, with us, they want to stay, with an even a stronger position. But because of the opportunity of other categories, you know, we will bring some new partners and be able to show that momentum also in this stream of revenue is very, very solid and very, very strong. And I can connect that also to the fact that you correctly say that we see an incredible potential on the Far East market. Far East Asia market, because, of course, everyone was focused on the fact that we need to develop our growth in The US, which is for sure a very important market. But as you correctly say, you the Far East Asia market represent for us another opportunity that needs to be kept for the future. And that is an area where in the next couple of years, we are are definitely going to be very effective in trying have another step of build there. The market will allow us to be even bigger, you know, with activities that we are preparing. For the growth.

Derek Chang: And I would like to just add to that, which is you know, across both Formula 1 and MotoGP, 3 of the largest markets for us and the priority markets are for now and over the next sort of 10 years are continue to be The U. S. Where obviously we have made huge inroads with F1, but I think there is still a ways to go. And clearly, we are only in the beginning stages with MotoGP in The US. I think that China and India, I have spoken about recently represent opportunities for us. We need to go about them sort of the right way, but there is a lot of affinity for premium sports over in those markets. The whole concept of what we are trying to do from a global as being a global entertainment brand. Resonates in those markets. We have sort of both MotoGP for its own reasons in terms of those markets you know, a lot of India, Southeast Asia, you know, have used frankly, motorcycles as primary modes of transportation. So a lot of appeal. But I think that the more general concept of those markets being sort of large those markets having an affinity for brand entertainment celebrity, all that stuff that our sports are going to bring to the table, make those markets attractive opportunities going forward. So with that, I think we will wrap the call. Thank you, everyone, for your interest as usual. Again, big day here but good things to come. So thank you.

Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time. And enjoy the rest of your day.