Liberty Media Corporation - Series A Liberty Formula One (NASDAQ:FWONA) Q1 2026 Earnings Call

0:00 Welcome to Liberty Media Corporation's twenty twenty six Q1 Earnings Call. During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer As a reminder, this conference will be recorded today, May 7. I would now like to turn the call over to Hooper Stevens, SVP, Investor Relations. Please go ahead. You very much for joining us this morning for Liberty Media's first quarter twenty twenty six earnings call. As we get started, I'd like to remind you that 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 ks and 10 Q, followed by Liberty Media with the SEC.

0:53 These forward looking statements speak only as of the date of this call, and 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 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 are on Schedule I and MotoGP Schedule II can be found at the end of the earnings press release issued today, which is available on our IR 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 and MotoGP CEO, Carmelo Estoletta.

1:49 Other members of the management will also be available for Q and A. With that, I'll turn it over to Derek. Thank you, Hooper, and good morning, everyone. When we spoke with you in February, we framed 2026 around three priorities: sustaining Formula One's momentum, positioning Loaner GP for long term growth, and remaining disciplined and opportunistic with our capital. Our framework remains intact, and we are seeing good progress across the portfolio. We delivered strong financial results this quarter at both F1 and MotoGP. Starting with Formula One, the floor continues to demonstrate the strength and resilience of its global platform. We made the difficult but appropriate decision, together with the FIA and local promoters, not to proceed with the Bahrain and Saudi Arabian Grand Prix in April given the situation in The Middle East.

2:39 The well-being of everyone in F1 comes first, and we will always manage the calendar with that principle in mind. While that creates a near term financial impact, it does not change our confidence in the long term trajectory of this work. We will be thoughtful in our approach, and we will continuously evaluate the calendar this year. And as Stefano mentioned to Bloomberg News last week, it might be possible to reschedule one race toward the end of the season. Formula One remains supported by strong fan demand, deep commercial partner interest, attractive media rights dynamics, and a stable long term foundation with the new Concorde Agreement. The early season has also reinforced the value of the investments being made around the fan experience and distribution. In The US, Apple's first season as our exclusive media rights partner is underway, and the initial results have promising.

3:31 Our partnership with Apple and its tech forward platform is already delivering early innovative enhancements to our F1 product, with multi view, data feeds and onboard features creating a more engaging viewing experience for our fans. Viewership increased through the first three races of the year. Fan engagement is up. We're attracting a younger and more female audience. And we're seeing expanded reach across the vast Apple ecosystem. Alongside Apple, we rolled out a series of dedicated marketing activations that significantly amplified the Miami race across both the city and the country, including nationwide Apple Store retail pit stops, Apple Maps integration, and the launch of new original F1 programming over race weekend. We're extremely pleased that the high energy from our U. S. Fan base and the broader race week has become a meaningful cultural and commercial moment for the sport in The U.

4:24 S. At MotoGP, the first full season under Liberty ownership is giving us even greater conviction in the opportunity. The sport is delivering compelling racing with the calendar evolving to expand its global footprint, including the return to Brazil this year. We are also beginning to broaden the ecosystem around MotoGP through initiatives like the Harley Davidson Bagger World Cup, which brings a distinctive new format and lifestyle brand into MotoGP weekend experience. The broadcast of the U. S. Grand Prix on Fox reached an average audience of 500,000, which is an increase over last year on cable and an increase from the last time it was on broadcast in 2023. We have also seen our social media followers in The U. S. Increase 16% since January 2025, which is an encouraging indicator of growing engagement in The U. S. Market.

5:16 The strength of MotoGP is its compelling identity. Fierce racing, extraordinary athletes, passionate fans, and a unique culture. Liberty's role is to help provide the commercial focus, operational support, and long term investment discipline that can allow that identity to reach a broader global audience. That means building capabilities carefully, strengthening the event experience, improving fan engagement, expanding commercial partnerships, and sharing learnings across the portfolio where they are relevant. Following the Liberty Live split off, our portfolio is centered around two world class boards with strong brands, valuable global rights, and multiple long term growth levers. We will remain thoughtful in our capital allocation approach as we support our operating companies as they advance in growth, and we will evaluate additional opportunities to deploy our capital.

6:10 Brian will cover the financial results in more detail. Stefano and Carmela will provide deeper guidance on Formula One and MotoGP. We remain confident in the strategy we laid out earlier this year. Formula One has a proven global platform for significant momentum. MotoGP has meaningful long term upside, and Liberty is well positioned as we build the next chapter of growth. Now I'll turn it over to Brian. Thanks, Derek, and good morning, everyone. As a reminder, each quarter in 2026 for the Formula One business will reflect an incomparable rate count and mix with the exception of the fourth quarter. Additionally, due to our decision to not hold the Saudi Arabian and Bahrain Grand Prix in April, results in the first quarter reflect a 'twenty two race calendar this year.

6:56 The second quarter will be the most impacted, with only five races expected to be held this year versus nine races held during the second quarter of twenty twenty five. The change in the race calendar did affect the pro rata revenue pro rata recognition of revenue and team payments in the first quarter. We expect the largest impact for not holding the two races in April to be from the loss of race promotion revenue, certainly, followed by hospitality and some minimal impacts to race specific sponsorship revenue. We do expect relatively limited impact sponsorship revenue as we anticipate the ability to offset some of that exposure with other races later in the season. On the expense side, we will not recognize most of the expenses related to the disrupted races, and net impact to F1 will flow through the team prize fund calculation.

7:44 Similar to revenue recognition, projected team payments in each quarter will be recognized pro rata over 22 races instead of 24. Now looking at the results for the first quarter. Most of the strong growth in Q1 year over year results is due to one more race being held in the first quarter compared to the prior year period. The change in the pro rata season based revenue recognition and underlying growth in the business. The first quarter of twenty twenty six held three races compared to two in the first quarter of last year, with Japan included in the current year period but not in the prior year. For the first quarter, revenue grew 53%, adjusted OIBDA grew 102%, driven by the extra rates held in growth across all revenue streams from underlying contractual fee increases. We Media rights and sponsorship revenue growth was driven

11:20 by the calendar variance related to recognition of season based revenue with three out of 22 races recognized in the quarter, or approximately 14% of season based revenue, compared to two out of 24 races, or approximately 8% of season based revenue recognized during the prior year period. Sponsorship revenue also increased due to revenue growth from new sponsors, including Standard Chartered. Other revenue grew due to higher hospitality, freight and travel revenue from one additional event held. Hospitality revenue growth was also driven by strong underlying Paddock Club performance and other premium product growth, licensing revenue and revenue generated after the reopening of Grand Prix Plaza in Vegas at the end of January. Adjusted OIBDA increased during the first quarter, driven by strong revenue growth discussed above, outpacing expense growth.

12:12 Increased operating expenses included higher team payments and expenses associated with hospitality, freight, and travel costs from the additional rates held, as well as an increase in new premium product offerings and higher freight, travel, and commission and other partner servicing costs. The increase in SG and A expense was primarily due to unfavorable currency exchange rates and higher personnel and technology costs offset by lower marketing expenses. Team payments as a percent of pre team share adjusted OIBDA were 51.7% for the first quarter of twenty twenty six. For the full year, we continue to expect to see an average of roughly 200 basis point improvement in leverage, in line with the average we've seen over the past four years. After 2026, for the remainder of the term of the new Concorde Agreement, we expect the payout percentage to remain relatively stable.

13:03 A reminder that team payments are best analyzed on a full year basis due to the quarterly fluctuations in team payments as 8% of adjusted OIBDA. Now looking at MotoGP, just a quick reminder that we closed the acquisition on July third of last year. Our financial results prior to the date of acquisition are presented on a pro form a basis as though the transaction occurred on 01/01/2024. And the trending schedule will be posted to our website after the 10 Q is filed, including results in US GAAP or historical periods. 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 of results, I'll focus on constant currency results. Year over year comparisons are impacted by the mix of races, and MotoGP flyaway races generally carry higher costs, including freight, travel, and ERDA fees.

13:57 MotoGP held three races in the first quarter, both this year and the prior year. Revenue increased at MotoGP during the first quarter due to the race mix and increased sponsorship revenue, slightly offset by a small reduction in media rights revenue. Adjusted OIBDA also grew during the first quarter as revenue growth outpaced expense growth. Cost of MotoGP Motorsport revenue increased due to the impact of higher freight expenses from race mix and increased fuel costs. Looking briefly at corporate and other results for the year, revenue was $6,000,000 which relates to rental income generated by the Grand Prix Plaza in Las Vegas. Corporate and other adjusted OIBDA was a loss of $7,000,000 and includes Grand Prix Plaza rental income and corporate expenses. At quarter end, Liberty Media had cash and liquid investments of $1,300,000,000 which includes $862,000,000 of cash at F1 and $186,000,000 of cash at MotoGP.

14:54 Total principal amount of debt was approximately $5,000,000,000 at quarter end, which includes $3,300,000,000 of debt at F1 and $1,200,000,000 of debt at MotoGP, with just under $500,000,000 at the corporate level. F1's $500,000,000 revolver and MotoGP's €100,000,000 revolver both remain undrawn. At quarter end, Liberty Media's net leverage was three times. As a result of not holding two races in The Middle East in April at F1, we expect there could be a modest increase in trailing twelve month leverage during the second quarter of this year. F1 and MotoGP are in compliance with their debt covenants at quarter end. And with that, I will turn it over to Stefano to discuss Formula One. Thanks, Brian. The 2026 season is off to a captivating start as we kick off this next chapter in F1's history with new regulations, new teams, and new winners on the podium.

15:51 Congratulation to Kimi Antonelli who became the youngest driver in F1 history to lead the world championship and taking three consecutive races win after winning the Chinese, Japanese, and Miami Grand Prix. As you know, we made the decision to not go ahead with the Bahrain Grand Prix and the Saudi Arabian Grand Prix as planned in April to ensure the safety and security of everyone in the sport during a very fluid and uncertain time. Saudi Arabia and Bahrain have been fantastic long term partners and we look forward to being back with our fans there as soon as we can. We were extremely excited to be back racing in Miami last weekend and 2026 has represented the start of an incredible new era for our sport.

16:37 The first four races of the season have also dealt. Social media engagement is up year on year and early TV data shows growing audience worldwide. Fun research also indicates a very positive response to the On Track Spectacle with particular appreciation for the level of action, racing battles and overtakes. In Miami, we saw sellout crowds along with exciting new activation with Apple, our new U. S. Media right partner. Engagement remains robust this season. We welcome 1,300,000 attendees to date with all four races selling out and the Australian group resetting a new attendance record. The Paddle Club is already sold out for the nearly all or our remaining races this season with over 65,000 tickets sold to date.

17:27 This figure is already in line with our 2,025 total paddle club attendance. To accommodate demand, we are increasingly paddle club capacity decision at Silverstone, Austin, Monza, and our promoter are working to increase capacity at the other circuit. Our successful collaboration with Soho House and Lewis Hamilton House forty four is also expanding and will feature at nine races location this year, up from five after the launch last year. House forty four is already sold out at eight races so far. In addition, our collaboration with Gordon Ramsay continues to grow with a new paddock based premium offering operating in Shanghai, And we are looking into opportunities to roll out the experience at other location, potentially starting with the United States Grand Prix in Austin.

18:20 Live audiences across our top 40 markets are up year over year relative to 2,035 across the first three races, driven by strength in key markets, including Brazil, Italy, and China. This season, we returned to global TV free to air in Brazil. In China, we kicked off our new media rights deal with the CCTV and I've seen more of the extensive coverage. The live broadcast of Chinese Grand Prix attracted 1,900,000 viewers in China, a plus 60% decrease year over year in one of our key growth markets. Our YouTube content generated almost 600,000,000 views through the Japanese Grand Prix, up 46 relative to last year. We grew our following nearly 20% year over year with over 120,000,000 social media followers as of the end of April.

19:13 Commercially, we continue our momentum across renewal and new partnership. We are delighted to welcome Apple TV as our new US media rights partner this season. Through its extensive ecosystem, Apple TV has allowed Formula One to reach a large US audience. The first three races delivered higher average viewership across track session relative to the last season. And we are pleased with that strong momentum carried into Miami. Our fans are collectively also tuning, tuning in for longer with total viewing hours increasing right to the line linear last year. Their average viewer of F1 content on Apple is both younger and more female. The sport is featured extensively within the Apple ecosystem and externally through innovative partnership with Netflix and Tubi, just to name a couple.

20:04 Our broadcast of the Miami Grand Prix at the IMAX Theater was extremely well received and continues to highlight the new ways we and Apple are bringing the sport to fans. We continue to see Mayo brand alignment between our two iconic global brands as we set out to take a more forward looking approach to how fans discover and consume Formula One. Globally, our F1 TV product continues to perform well with F1 TV revenue increasing 28% year over year. We were delighted to announce yesterday our five years renewal with Sky in The UK through 2034 and Italy through 2032 inclusive, that will take us into the next decade with our incredible and long term partner.

20:54 The depth and quality of the programming and content Sky delivers has been impressive and helped to engage and grow our fan base in both The UK and Italy. In The UK, total viewing on the Sky has increased by 90% with female female viewership more than doubling and under 35 viewership growing under 20% since becoming the exclusive home of F1 in 2019. In Italy, we have seen a 25% increase in viewership this season in part driven by the strong performance of Ferrari and Kimi Antonelli. Sky has been a trusted partner of F1 with world class coverage and we are delighted to extend our partnership into the future.

21:40 Internally, we remain active in our negotiation of renewals, recently renewing with BEEN in Pan Asia and with Foxtel in Australia. We are also thrilled to announce we will be returning to race at Turkey Istanbul Park next year for the first time since 2021 under a new five years agreement. The return to the Turkish Grand Prix will be exciting for the F1 fun drivers and teams. Formula One continues to grow strongly in Turkey where the sport now reaches more than 19,000,000 fans and almost half of the fan base is under 35. We are also seeing strong momentum on digital and social platform within Instagram followers growing by 30% year on year. We also officially began the 2026 public sales cycle for our fourth edition of the Las Vegas Grand Prix today.

22:33 Following last year's sell out and ahead of our public on sale, demand indicators were very strong with the positive for this year's race at record levels. We have maintained our sponsorship momentum with an active quarter of renewal and new partnership. We entered into new multiyear agreement with Fundual, a best way to reinforce our desire to enter the betting space regionally. We have also signed Marsh as our official risk partner and official insurance broker partner. We have also extended our sales force and partnership, all effective this season. Our momentum continued to accelerate across our other revenue streams, including licensing and hospitality.

23:19 We have announced our multi year extension with Fanatec, our sim racing hardware company, and relaunched our Esports Championship, hosted two live events to date and one in our new on-site facility, Abigail. We are fully leaning into our first full year of partnership with Disney, including the successful launch of Disney and F1 Fuel the Magic campaign in the Asian Pacific region. At the Chinese and Japanese Grand Prix, we launched specialty F1 Disney stores in the fan zone, driving overall retail sales during the quarter up 125% with China retail sales growing nearly 80% year over year. We reopened our Grand Prix Plaza site in Las Vegas at the end of January and yearly performance has been encouraging.

24:06 Average weekly attendance this year is nearly peak levels from 2025 with private events occurring weekly. Demands for F1 drive has also been particularly strong with the multiple sold out weekends. We remain focused this season on cultivating and fueling the fandom with our always on strategy through beginning the creativity, thrill and excellences of our ever evolving sport and entertainment platform to the fans. While we have, grown so much in such a short amount of time, we believe we are just at the beginning of what is possible for Formula One. The momentum we see across all our business continues at a remarkable pace and the foundation we are building today will create enduring value for our partners, shareholder, and our fans for the years to come.

25:01 Avanti Tutta, full speed ahead as always. And now I will turn the call to Carmelo to discuss BottujP. Good morning, and thank you, Stefan. We have a strong start to the beginning of our season with compelling storylines on track and continued momentum across the business. With Liberty Media's continued support, we are confident in achieving the long term strategic vision of our sport and are encouraged by the early progress it has been today. As you have seen, we have made a decision to postpone our Qatar Grand Prix to November, given to the ongoing situation in The Middle East. We look forward to returning to the vision soon. On track, the racing remains as competitive as ever. While Marco Veseki continued to lead the Riders Championship, we have already seen seven riders across five different teams on the podium this season, highlighting the unpredictable and excitement that define our sport. We welcome more than 720,000 funds across our first four races, including a record of 228,000 funds in Bolivia.

26:04 Also returned to Brazil this season after twenty years EATUS in the country with that city to city quick integration and deliberate and exciting race within. Brazil is one of our most engaged markets with over 80% of funds consuming MotoGP content weekly. Across the Spring and Grand Prix in Brazil, our broadcast audience surpasses over 1,600,000 viewers on one. We look forward to return on next year alongside of our returns to Buenos Aires and Australia. Both are the new circuits in or near city centers bringing the thrill of MotoGP racing closer to our funds. We continue to track brand awareness and engagement to our fund insights platform, which will support our commercial evolution and localized content initiative in growth markets, including The UK and USA. We ended the quarter with nearly 62,000,000 social media followers across our own platform.

26:59 Video views across our digital platforms, excluding video pass, increased almost 40% on the same period on 2025. We also continue to make progress with our commercial partners. We have extended our partnership with Serbos TV in Austria to broadcast our rights through 2030. Starting with your syndrome pre decision, we also expanded our partnership with QUINT through an exclusive multi years agreement. With QUINT's invaluable experience, we are focused on scaling our hospitality offering, enhancing the premium hospitality experience with the VIP Village and driving for the mix shift improvements towards high end customers and partners. We are encouraged by the strongest start to the year and the quality of demand we are seeing across our portfolio.

27:46 With double digit growth in ticketing volume and sustaining momentum across all regions as we roll our new innovation across our hospitality product suite. We look forward to continue to update the investor community on our progress. Now I will turn the call back over to Derek. Thank you, everyone. We appreciate your continued interest in Liberty Media. And with that, we'll open the call up for Q and A. Operator? Thank you. We'll now be conducting a question and answer session. Our first questions come from the line of Sean Diffely with Morgan Stanley. Please proceed with your questions.

28:45 Great. Thanks very much, team. Two, if I may. First on sponsorships and second on capital allocation. Congrats on the success that you've seen on the sponsorship side. I think over the last few years, it's been adding new sponsors really driving a lot of this, and you continue to do that with Standard Chartered and Marsh. But it also seems like you're gaining traction on the renewal side with upgrades like Salesforce and all in. I was hoping you could talk about the balance of kind of new and existing partners going bigger and any categories or verticals that you think you're still underpenetrated in? And then second question, Derek, you had mentioned evaluating avenues for capital deployment to deliver long term value to shareholders. I was hoping you could elaborate a bit on that. What's your framework for determining what those could be and how we should think about your approach to investing in the core businesses you have, potential M and A, or capital return? Thanks.

29:35 Sure. Thanks, Sean. Let me take the second one first, and then I'll hand it over to Stefano for a bit on the sponsorship. I think on capital allocation, we've been pretty clear in recent history here that our primary focus has been to delever, which we clearly are in the process of doing, as well as looking at strategic investments and ultimately also the thought of capital return to shareholders. I don't think we're in a position right now to say, hey, we're pursuing one over the other. All options are on the table, and it's something that we are looking at on a regular and, frankly, a daily basis. That's the job of the folks here. And then just we are very focused on the performance of our operating companies and leading into those and continuing the strong performance that we've seen there, which frankly puts us in this position to be able to have the questions that you've asked.

30:34 And also, I think just in the very near term, we clearly are very bullish on our businesses and where we see them going. We can't control every macro factor out there. We don't have a crystal ball. So to some extent, we're being a little bit conservative right now, and we make sure that we understand the implications of some of the other events that are happening out there. On the sponsorship side, I will let Stefano talk a bit about sort of his mix of renewals and new sponsors and where he sees some of that going. Thanks, Derek, and thanks, Sean, for the question. If I go back a couple of years ago, we always said that our duties to make sure that what we are offering is solid and genuine, and only solidity and ingenuity has allowed us to be stronger in this momentum.

31:29 And if I just think back and no one would have thought that, for example, in the category of programming, there will be someone who really wanted to invest in our platform to develop their business. So it is true that now, as we said last time, we see potential to keep growing because we have done a lot of new step in terms of creativity activation that has allowed us to offer something new in the market to different partners. It is true that on the other side, what we have done is basically moved also from normally what has been considered a B2B partner, also to B2C. We have seen that in the last couple of extension renewal or a new entry. And it is clear that the category of high-tech is the category where we can find some other opportunity in the future, even if the big partner we have now are basically very, very interested to lock down in the future in order to prevent others to come in.

32:26 So it's a great situation we have. And I go back to the fact that for us now, it's really a matter of keep growing, keeping offering something new to the partners, keeping giving the momentum of what we can offer in a very genuine way. And that is really it has been so far a successful strategy that we continue in the future, because as you said, Sean, now we are also in the process of having active renewal much more in advance before the expiry date. That means that everyone believe in us, and this is something that we feel we take back home as a great responsibility. Thanks very much. Thank you. Our next questions come from the line of David Karnovsky with JPMorgan. Please proceed with your questions.

33:13 Hi, thank you. Maybe just starting on the Sky agreement announced yesterday. You did have some time on this one in both Italy and The UK. So interested in why now is a good moment to execute on a deal with what I think is your largest media partner rather than the alternative, which would be waiting and kind of testing the open market in a few years? And does this agreement have any current economic impact? Or is this just about locking up future terms? Sure. Hey, David, thank you for the question. I think I'll start and let Stefano take it. But there are no current implications as a result of the deal. I think of the things to think about is, whether it's sponsors, media partners, local promoters, what we're really asking a lot of these guys to do as they partner with us is to invest in the product.

34:07 And in order to do that, you want them confident with the relationship and where things are going to be on a longer term basis. So sometimes we are entering into these discussions early to facilitate exactly that. And you see that at a lot of the local promoter deals that Stefano has done in recent history, which are really to then facilitate increased investment and the infrastructure, hospitality, things like that. And it's a similar concept here as these guys continue to work with us to build sort of the next gen of what the viewing experience is like. It's the result of us to sort of lock up in a manner like this. I'll let Stefano elaborate on that. Thanks, Derek. I would add on top of what you said, answered the question of David, is that first of all, let me thank Dana Strong and all the team at Sky for the tremendous job they've done since the first day that they are with us. And now this is an extension of an incredible deal that will cover a very important area of where our funds are very solid, that is UK, Ireland and Italy.

35:15 And it, of course, will have an impact that will be on long term because as Derek was saying, you know, the financial implication up to the end of the 2008 expiry has not been touched. We're just looking ahead with a more stronger financial and technical contribution. It is true on the other side, they are already very, very focused on delivering new extra content, not only using the so called broadcasting operation, they have a big voice in influencing, a great demand that is growing in this market. And that's something that we want to recognize to them. And on the other hand, we do believe that the privilege of being a worldwide sport, we can really understand where we do believe that the shifting between traditional broadcast and virtual streaming is moving. We do believe that in the market that we have signed the deal as an extended agreement with Sky, the situation we're having, it will be the best even mid and long term. That's why we are very, very convinced that this relationship will continue to create an incredible demand of interest and the right product that will serve in this market to grow. And of course, in other markets, the situation could be seen differently because that's really where we are, understanding what could be eventually other opportunity that we can take, for example, in new markets that could be potentially very interesting in the future to bundle with other sport. Why not? So we need to be creative. That's what has been always our approach to try to find the best solution with our partner that has contributed so

36:48 much for the growth of our sport. Okay. And then I have one for Brian. Brian, your team payments figure this year always gets a lot of scrutiny. So I wanted to see if you could maybe shed any light on your budgeting approach, how you approach variable items like Vegas or potential sponsor deals? And then would there be any contingencies in that number for The Middle East races you have on the calendar later this year, just given the ongoing conflict there? Yeah, thanks for the question, David. No, the budgeting approach is similar to past years. The biggest variable that we've had over the last few years since we've launched the Vegas race is the Vegas race. So there is certainly some conservatism in there around Vegas, just to give ourselves room as it relates to the team payments.

37:39 But the 200 basis point decrease that we kind of gave you guys at the end of the year, that still holds true. Right now, we're focused on a 'twenty two race calendar, and as Derek said, we're still hopeful that we can move one of those races to the back part of the year. If so, that would be upside, But that's what's in the forecast at this point, it's the 22 races. Thanks. Thank you. Our next question has come from the line of Steven Lasichek with Goldman Sachs. Please proceed with your questions. Hey, great. Thanks for taking the questions. Derek, there's been some discussion in the press around Miami potentially adding some more paddock club capacity as well as maybe a motor GP raise at some point in the future.

38:27 I was hoping you could maybe talk a little bit more about the opportunity in Miami to expand and as well, maybe more broadly about how you're thinking about the opportunity to expand padded club capacity across the calendar as well as how many opportunities do you think might be out there to add a MotoGP race alongside F1 at some of these tracks? Let me take the second part of that first, and then I'll go back to the PATTER Club and then turn it over to Stefano so he can talk about that. But on MotoGP, I think the context for Moto really is we've said it, and we're going to continue to say that The US is an important market for MotoGP. And so we are looking at all avenues to grow our business here. It's going to take time, just like it did with Formula One. But we do see that there's an appetite and that there's going to be a market here. And how we go about that, clearly, will be we do have interest in adding races in The US.

39:26 Miami would seem to be a logical spot because there's already a track there. There's a lot of things that have to get worked out, whether it's Miami or any other track in terms of whether or not it works for MotoGP and the safety concerns and stuff like that, where you've got different requirements than Formula One, as well as what markets, frankly, make sense from a commercial standpoint. But those are conversations that we will have with Miami, with other folks also, trying to scope out what the right locations would be for US expansion. As it relates to Miami itself, they did announce over the weekend that they are expanding padded capacity.

40:13 I think that Stefano has spoken about this on many occasions in terms of the way we're structuring a lot of our promoter deals going forward is really a lot of it's the expansion of high end hospitality. We saw that in Budapest. I think we announced Austin recently. They've got a whole new building going up down there around the first term, but I'll turn it to Stefano for a little bit more detail on his thoughts. Thanks, Derek. I mean, let me take the opportunity to, after the end of that incredible Grand Prix in Miami to thanks, you know, Tom Galfick and Katie for their incredible organization. It's been really a phenomenal event with a lot of people, a lot of action on the track, and it's true, we just mentioned, that they're going to invest even more to make sure that the quality and the capacity of that event will be even bigger in the future. But that goes back to what we said, I think the other time, there are certain places or certain events that we believe are fundamental for the growth of our sport, And by, given the possibility for them to have long term deals, we'll push them also to invest in the right way. And on top of what Derek has just mentioned, we want to remember that also Monza will do that, Hungary will do that. Almost everyone will have plans to increase capacity with the right quality of the offer. That is something related to the request. The demand is very, very high. The profile of the

41:44 customers that are coming now also with the new partners require a different possibility of expanding that. In Monte Carlo, in Monaco, for example, you know, we have extra capacity. We have also, the part of the MSC, a boat where our guests can exploit a different kind of experience. So all is connected to the fact that the ecosystem is solid, strength together, working with the vision to keep growing the business. Otherwise, no businessman will invest in something that they believe will be beneficial also for their interest, which is normal. Therefore, as I said, these are not the signal. I do believe that Stephen of the quality and the performance of our sporting platform today. Great. And then maybe just one for Brian on SG and A continues to trend higher on the F1 side. I was just curious if you'd help unpack what we're seeing there in the first quarter, and then maybe help us think about how that line should trend as we think out here over the balance of the year. Thank you.

42:47 Yeah, mean, this quarter, the three biggest drivers are you do have an FX impact in the SG and A number that's negatively impacting the growth. So we'll see how that fluctuates as the year goes along. There are also some higher personnel costs and some SG and A costs around LVGP, which are also kind of more personnel related, and I think those are a bit more front end loaded. That's offset by reduced marketing costs because remember last year we had the seventy fifth anniversary event. So those are really the big drivers. There are some increased IT spend in there as the company's working on different types of projects.

43:36 Thank you. Thank you. Our next questions come from the line of David Joyce with Seaport Research Partners. Please proceed with your question. Thank you. In thinking about the Formula One calendar this year, if there is the possibility of adding Saudi Arabia back into December and shifting out the week, how does that reallocation based accounting work for the various revenue lines? Would you restate the first quarter? Or would you reallocate going forward with a true up? How should we think about that? And then secondly, kind of housekeeping, why was D and A up a lot sequentially? Thanks. Yeah, on the first part of the question, any impact from adding an additional race would come through in that quarter in which you make that change in the calendar.

44:34 On the second part of your question, David, D and A, it's up a million bucks. The company's been investing in their operations facility out in Biggin Hill, So you see increased depreciation associated with that building, was that project was largely completed early last year. So that's probably what's driving the bulk of that difference. You also have GPP CapEx that was in our results early in 2025, so you'd see increased depreciation associated with that. All right, thank you. Yep. Thank you. Our next questions come from the line of Matt Condon with Citizens Bank. Please proceed with your questions.

45:20 Thank you so much for taking my questions. My first one is just, you know, after the first couple of races with Apple in The U. S, just any key learnings coming off of that, whether it be from the broadcast itself, but also just the distribution to the broader Apple ecosystem? And then my second question is just on the calendar opportunity in MotoGP and just talked previously about optimizing race locations. Just how are those conversations coming when you try to move some of those into city centers and such? Thank you. Sure. Thanks, Matt. On the Apple question, I will let Stefano take most of that. I think that what we've seen, though, is the viewing across all segments of the race weekend has been very strong.

46:12 I think that Apple has done a great job bringing people to the ecosystem. I think that on the risk mitigation side, I think people probably anytime you change broadcast partners, you always run the risk of having a lot of fan outlash that they can't find it or things like that or it's not as good. And we haven't had any of that back and spent to the positive in terms of how consumers have been interacting with product, with the viewing, and sort of the commentary out there. Been a good experience for them. But I'll let Stefano continue on that, and then we'll come back to the calendar question on LTP.

46:59 Thanks, Derek. Matt, I would say to add on what Derek had just said, we do not have to forget two things. Our fan base is younger, there are a lot of females, also around 40% in US. And that's why we do believe that Apple will guarantee to them a much more suitable way to live that experience. We don't have to forget that the other positive effect of what is a journey that just happened, that we just did only four races. And of course, it will be a long deal. So every weekend, there is something that we learn and will improve. There is the possibility as it has happened for Apple to use different platforms, know, IMAX to be, you know, stores and other activations that's being done will generate more interest and more follower. And I would say it's a more dynamic way to lead that sport. And that is in line on what we're going to see. I mean, there is a tremendous effort on Apple also to deliver some new technical content.

48:04 And these are, as I said, long term journey that so far has been very, very successful because we're just at the beginning of a new journey where I would say on top of the four races, the three, the first three were not the, let's say, time friendly for The U. S. Market. And as a global notice for what we can see, it has been a very, very positive start of the season. So that's why we do believe that this is just the beginning of something that will create even more attention for the future and which I can confirm, because Eddy Cue was present in Miami, Apple is full on board. Full on board, confirmed by Eddy Cue, but also the future CEO of Apple, that he's a racing fan, that he's not bad. And for the second question, would say I go back to Derek, if it's okay. No, thank you. Thank you, Stefano. So on the MotoGP comment, I'll start and I'll turn it over to Carlos for some additional commentary.

48:54 I But do think that our stated objective is to get some of these races closer to cities where we can leverage off of the infrastructure, whether it's the airport, long distance travel, or for both ourselves as well as for the fans who are coming in internationally and the hotels and the restaurants and ease of access, I think, is important. And you're seeing this with the races we announced for next year, both in Buenos Aires and Adelaide. So we're already starting to make progress on that. That being said, you also don't want to just wholesale change out all the races. We have a long heritage year of races and many, many compelling locations where it makes a lot of sense to keep them there. And there have been fixtures on the race calendar.

49:49 And they bring a lot to the sport and a lot to the identity of the sport. I have been this year already in Austin. I've been to Haref, headed to Mugello, and Aston later this year. We really want to get a good sense of what it feels like in the different locations. Because what we want to do is create a fan experience that is engaging, exciting, entertaining, accessible wherever we do it. So there's a lot to be learned even on locations where we may not move, but how to improve those. So it's a mix of all of that as we think about our calendar moving forward. But Carlos, you may have a couple of words to add to that. So I think Carlos might be switched off, we can come back to that later. Operator, we'll take the next question.

50:47 Thank you. Our next questions come from the line of Steven Cahall with Wells Fargo. Please proceed with your questions. Thank you. First, I just wanted to ask about fuel prices. I think the structure, you know, allows for a pass through from F1 to the teams on fuel prices. But I imagine in motorsport when fuel prices go up that cost flows through somewhere to someone. So can you just help us understand how rising prices for gasoline will affect both F1 and MotoGP kind of short, medium term and where we might see some of that reflected longer term in the P and L? Then, Stefano, I just wanted to ask you about competition. So, you know, we've seen Cadillac and Audi come in this year. Ford is making a big push with Red Bull.

51:36 The racing has definitely improved with the new technical changes. We haven't, though, yet seen kind of any new teams get from the midfield to the top tier. What do you think needs to happen for that to change? Is it a technical issue? Is it a financial issue? Since I think competition is always good for the value of the sport. Thank you. I'll let Brian start with the fuel question, then I'll turn it over to Stefano for the racing question. Yes, Steven, thanks for the question. On fuel, it's a little bit different for the two businesses. As you rightly point out, at F1, if we have increasing fuel costs and freight costs, those are generally passed through to the teams. So you'll see a bit of a gross up on the income statement throughout the year, but pretty minimal impact to net margins.

52:24 MotoGP, it's a little bit different. There's more of a kind of a fixed structure there. So to the extent we experience rising fuel costs, you might see some pressure to our overall cost of revenue without that offset on the top line. Stefano, you want to take the racing question? Thanks, Eric. Steven, I mean, I think that what we see is definitely from the an experience point of view, something that you were expecting. Know, F1 is a big beast. When you come in, we are, of course, very, very pleased with what has been the new entry, but the process is not related to money, it's related to experience and time. This is something that has been always elements that happened since the beginning of this sport, a big technological challenge, is a work of team players that need to understand what is the dimension of the challenge.

53:24 It's something that, of course, is related to the fact that they are new, and they will have the chance with the budget cap to have less burden in respect of the past. So it's just a matter of being a little bit patient, even if, you know, when in a racing world, after only four races, you believe that it's 400 races, because every day, every minute, you know, the pressure is getting higher. The advice that I would say they know very well is not to fall in that kind of anxiety, because anxiety will not have to be even more performant. The beauty of what we are seeing in a totally different scenario of a totally new regulation is something related to the fact that there is a lot of margin for the improvement, that of course, the more you are behind, the more it could be bigger if you are able to take the right stream of development, and if you're working hard with your drivers and teams to improve the performance.

54:14 And in this specific year, there are so many new elements that could allow them to be even faster if they understand where to focus the need for them to recover the gap they have now. Thanks. Thank you. Our next questions come from the line of Joe Staph with Susquehanna. Please proceed with your questions. Thank you. Good morning, everyone. Just trying to maybe better understand the rescheduling scenarios. I know it's complicated, but seems to me a second race in Las Vegas might be, of all your scenarios, a relatively easier one given the city's flexibility and your vertical ownership of the Las Vegas Grand Prix. Is that a fair assumption?

55:06 And then two, with respect to whether or not you reschedule or not reschedule, how much, say pre marketing, how much of a lead time do you need in terms of being able to properly market that and so forth? Is it two, three months? Just wondering. Sure. Look, I think we are evaluating all the various alternatives and trying to make decisions in a timely fashion that will give us as much lead time to the extent we make changes and make adjustments. But I'll let Stefano talk through some of those specifics as he and his team are working overtime, trying to keep up. Yeah.

55:54 Thanks, Derek. Thanks, Joe. I mean, to be very direct, I mean, to avoid any speculation, you know, the only thing I can say that we have plans, hopefully not to be applied because we really hope that the situation for the world, not only for the racing, will go back to normal situation. We have plans, of course, the lead time of the cutoff really is different between the fact that we can eventually recover what has been not run-in April, versus what could eventually happen or not happen the end of November, beginning of December. We are of course aligning with the teams, with the promoters, because that's something that has a big chain of reaction, but we are in the due time, we will keep everyone informed, but I hope you understand, Joe, if we just say something that will be a speculation that we want to avoid, because as I said, the first hope is to make sure that we go back in the place that we should be.

56:52 Understood. Thank you. Thank you. Our final questions will come from the line of Ian Moore with Bernstein. Please proceed with your questions. Hi, thanks. I know the announcement