Tag: WWE Financials

Despite a huge increase in profits over last year, a series of warning signs has led to WWE stock falling $2.43 per share to $74.94 after today’s investment call. However, there was a feeling the larger drop was an overreaction and the stock is starting to rebound.

WWE took in $188.4 million in revenue in quarter three and ended with a $33.6 million profit. For a comparison, the first two quarters profit was a combined $21.8 million. Last year’s third quarter had $186.4 million in revenue and $21.8 million in profits.

However, there were negative signs, in that the profit increase was due to a $15.6 million benefit provision from income taxes, so if you take that out, operating income fell from $31.1 million last year to $18.0 million this year.

It was that figure, along with Wall Street expecting $202 million in revenue and falling short, that caused the decline.

The major difference was an increase in spending which was not offset by the much smaller increase in revenue. In addition, while TV rights fees continue to increase, live events and consumer products were significantly down, to the point where the live events are barely breaking even, with just $120,000 in live event profits for the combined months of July through September.

Vince McMahon said that he has always considered live event attendance as the barometer of how well they are doing, that he knows what is wrong and said they are antiquated, that he knows how to fix it and that they will turn around.

They also said the long-term goal is to have Performance Centers all over the world in every major market and that they are working on major changes for the business. During the call, the company said that the show in Saudi Arabia was a sensitive subject and they would say nothing more than their statement earlier today.

The WWE Network had 1,615 subscribers on September 30, broken down as 1,186,000 in the U.S. and 429,000 outside the U.S. At this time last year, the numbers were 1,507,000 subscribers broken down as 1,106,000 in the U.S. and 401,000 outside the U.S.

However, that is misleading due to discount subscribers, as while during the quarter, the average for the quarter was nine percent more subscribers than last year (at the end that dropped to seven percent due to weaker performance at the very end of the three months and stronger performance in the earlier portion), the revenues were only up two percent, meaning far more people were paying lower rates.

The decline from WrestleMania was 193,000 through September 30 this year, as compared with 154,000 last year, so that was a negative.

Arena attendance, averaging 4,500 fans in quarter three in the North American market, was the lowest in many years.

Even with the declines in key indicators of overall popularity, the television rights fees will keep the company at record profit levels going forward.

WWE’s first quarter business report released today listed $187.7 million in total revenue and $14.8 million in profits, as compared to $188.4 million in revenue and $900,000 in profits for the same quarter last year.

The revenue was slightly below Wall Street’s expectations of $191 million, but profits were ahead of expectations of $10 million to $11 million.

Some of the profit interest is due to a lower tax rate from movement from the Trump Administration, although that is a small part of it.

Wall Street was happy with profits beating projections as the stock has climbed to $40.92 per share at the time of this report.

There are also differences in timing related to recognition of licensing revenue in how they have changed reporting that would make the numbers different. Using last year’s methods, the revenue figure would be $198 million. That will make a difference later in the year as the estimated $10.3 million in revenue will be recognized in later quarters. However, last year when it came to profits was impacted by legal expenses of $5.6 million and $2.1 million in movie studio losses.

Essentially, the company is being carried by media rights deals. As they continue to escalate, revenues and profits escalate with them. The Mixed Match Challenge deal with Facebook also helped in that category. The WWE Network increased in subscribers but it wasn’t in the current report given direct numbers of how all of the 99 cent for three month subscriptions affected revenue. But WWE Network expenses were down due to lesser money spent on original programming.

Overall, the company was far more vague regarding details and different categories as compared to the past.

Live ticket sales were slightly down, due to slightly lower attendance factoring out last year’s San Antonio Royal Rumble from a comparison point. There was also a decline in merchandise sales even with running four more events. Venue merchandise, even with running more events, was down 18 percent, but some of that is also because the Royal Rumble sold so many fewer tickets this year being in a smaller arena. Consumer product revenue was cut in half but that is partially a nature of timing of when the revenue is recognized and that should even out by the end of the year.

If you factor out the Rumble, the declines are slight.

The company is projecting 1.77 million paid Network subscribers on average for the second quarter and is projecting OIBDA for 2018 to hit $150 million, which would be easily a record-breaking year.

When asked, they said that information regarding revenue from Saudi Arabia would be released at the next call in early August past calling the show on Friday the most successful international event in company history.

They hope to have announcements of a new television deal by September.

There was also talk about tiered Network pricing but they didn’t go into detail, and pushed that they had a 10-year relationship with Saudi Arabia and are hoping to be part of social changes in the years to come.

WWE reported this morning revenues of $186.4 million and profits of $21.8 million for the third quarter of this year, numbers that beat Wall Street estimates of $172 million and $15 million.

That would make this the first quarter in recent memory where the profits beat the dividend payout, which was $9.42 million.

The strong numbers led to a stock price increase of $2.27 per share to $23.82 at the time of this writing.

The keys were increases in profitability in most categories, with only WWE Studios and home entertainment falling below last year’s numbers.

WWE Network profitability increased from $15.7 million during the third quarter last year to $24.3 million, due to a combination of more revenue and lower spending due to producing fewer original shows.

However, the 1,507,000 subscribers for the Network, while up four percent from one year ago, was a decline from the last quarter. There were 392,000 new sign-ups and 453,000 cancellations during the quarter. During the third quarter last year, there were 388,000 new sign-ups and 455,000 cancellations, so the trend was very close to identical.

This shows that the strength of the pay-per-views, as the main events were stronger this year, only has a very minor effect on subscription numbers. The other take is that the Mae Young Classic, with all the hype, really meant nothing for subscriber numbers.

They also predicted another drop in Network subscriptions, as much as 50,000, in the fourth quarter.

The pattern is for the big growth for the Network to come in the first quarter and early second quarter.

WWE also increased profitability of house shows, although it was by running more total events as the average attendance dropped from 5,300 to 4,900 per show.

Licensing profits went from $4.6 million to $6.7 million due to an increase in mobile game sales.

During the conference call, WWE pushed the idea of localized television, like they have in the Middle East and India, and have secured 20 new advertisers for television. They pushed the worldwide aspect of the product by noting that of the athletes training at the Performance Center, 40 percent come from outside the United States.

The company pushed the new television negotiations. The deal with NBC Universal expires on September 30th, 2019, while deals in the United Kingdom and India, the other two largest revenue television deals, expire on December 31st, 2019.

They are targeting a new U.S. deal and announcement sometime between May and September of 2018.

Though WrestleMania 33 took place in the second quarter of the year and the company had already released an updated network number following the event, WWE posted its first quarter financial report today.

Of note, the WWE Network averaged 1,490,000 paid subscribers over the first quarter of 2017. WWE noted that the number represents a 16 percent increase over last year’s opening quarter.

There were 1,574,000 paid network subscriptions as of March 31st, with 1,165,000 subscribers in the United States and 409,000 internationally. There were 1,697,000 total subscribers at the end of the quarter.

The network had 1,661,000 paid subscriptions as of April 3rd, which was the day after WrestleMania. Total subscribers fell just short of two million then, coming in at 1,949,000.

Revenue was also up in comparison to 2016’s first quarter, increasing to $188.4 million from $171.1 million. As Dave Meltzer wrote in this week’s Wrestling Observer Newsletter, profits were down in comparison to the same period from last year.

“We are pleased with the continued growth of WWE Network, which is a critical building block of our content strategy,” Vince McMahon was quoted as saying in a press release. “The recent production of WrestleMania set records for network viewership as well as digital and social engagement. As we leverage continuing innovation to extend our reach in India, China, and around the world, we are confident that the enduring and increasing global power of our brands will provide a solid foundation for long-term growth.”

WWE’s presence in India also came up during an investor’s call that the company hosted, with a question being asked about Jinder Mahal’s recent push and if it was a strategic decision to cater to fans in the country given his Indian heritage. Chief Strategy and Financial Officer George Barrios answered that they let storylines drive who is popular or not, but said that a local character getting hot could boost business in a country a bit.

WWE is holding their Q3 review conference call Thursday morning, but released some of their financial documents already, showing a slight drop in average Network subscribers for the July-September timeframe.

The Network closed the quarter at 1.444 million subscribers and averaged 1.458 million paid subscribers worldwide. Both are down from Q2’s 1.511 million close and 1.517 million, respectively. Q2 included Wrestlemania.

The free Wrestlemania promotion saw 370,000 free users at the time of WWE’s big event with 1.454 million paid.

While the conference call is at 11 AM EST and will be live tweeted on our account by friend of the site Chris “Mookie” Harrington, here’s a few other financial notes from the documents released thus far:

– Q3 revenue was $164.2 million, “on par” with 2015 Q3 revenue.

– Revenue to date is up 8% to $534.3 million.

– Their video content had 11.5 billion views on social media and digital platforms, way up from last year.

– By year’s end, they expect to have 7000 hours of content on the Network, 4x the amount at launch.

– Raw ratings were down 14% from the year prior while SmackDown was up 13%. In the same timeframe, USA Network was down 11% while the top 25 cable networks were down 6%.

– Social media followers and engagement totals continue to increase.

– Live event attendance was slightly down from Q2 in North America, but slightly up internationally. However, revenue was up.