WWE Reports Record Revenue In Second Quarter Results!

While WWE’s current product may not be setting the world on fire quality wise, it certainly seems to be doing so financially speaking!

If you want to read the full details, click the following link for a detail report of WWE’s Q2 earnings:  https://www.businesswire.com/news/home/20180726005269/en/WWE®-Reports-Record-Revenue-Strong-Q2-2018

For the rest of us who aren’t into in-depth financial analysis, here are the highlights:

  • Revenues increased 31% to $281.6 million, which was the highest quarterly revenue in WWE history

Sir Mitch Says; Wow…just wow! However, you have to remember Revenue isn’t net Proffit. 

  • Operating income nearly doubled to $21.2 million from $10.7 million in the prior year quarter

Sir Mitch Says: This one is a head scratcher for me as WWE hasn’t really been splashing the cash regarding production value. Nor have they been paying their employees or executives extra from what I’ve heard. But there are a lot of costs associated with running a company like WWE so the money must be going into something!  

  • Adjusted OIBDA1 increased 79% to $43.5 million

Sir Mitch Says: For those unaware of what OIBDA means, it stands for Operating Income Before Depreciation and Amortization. Basically, its an accounting term publicly traded companies use to spin how much money they’ve made by not including expenses, taxes, etc. It’s a silly calculation that shouldn’t be taken seriously, but companies love because it makes them look good! 

  • WWE completed agreements with USA Network and Fox Sports, effective October 1, 2019, which increase the average annual value (AAV) of WWE’s U.S. distribution to 3.6 times that of the prior deal with NBCU

Sir Mitch Says: This is where the vast majority of WWE’s revenue comes from…TV deals! With what WWE gets now from licensing fees and a share in Ad revenue from deals domestically and internationally (which they see a larger share of every year in the U.S. as part of their current deal with NBCU) is set to increase five times over when their new deals come into effect in 2019 (provided the TV ratings stay at the same levels or better yet increase after the new deals take effect).    

  • WWE Network average paid subscribers2 increased 10% to 1.80 million paid subscribers, consistent with the Company’s guidance

Sir Mitch Says: The Network always sees an increase in subscribers during Q1 and Q2 due to both quarters landing before, during and just after WrestleMania season. Q3 and Q4 tend to feature a drop in subscribers. Still, the Network manages to keep some of those new subscribers as the streaming service has seen rather slow but steady growth year by year.  

  • Digital engagement continued to grow through the first six months of 2018 with video views up 58% to 14.4 billion and hours consumed up 71% to 509 million across digital and social media platforms3

Sir Mitch Says: WWE figured out pretty quick that any video featuring Braun Strowman or Ronda Rousey results in a massive amount of Youtube hits.  

As most have suspected, Live events appear to be the only real chink in WWE’s armor right now. And the Q2 results reflect this. However, WWE has offset any possible losses by increasing ticket prices by 5% on average and the $20 million upfront they received from the Suadi government to stage the Greatest Royal Rumble event:

  • There were 90 total events (excluding NXT) in the current quarter, consisting of 61 events in North America and 29 events in international markets, as compared to 92 events in the prior year quarter, including 66 events in North America and 26 in international markets.
  • North American ticket sales declined $2.4 million primarily due to the staging of five fewer events and an 8% decline in average attendance to 5,900. Partially offsetting these factors, the average ticket price increased 5% to $81.71.
  • International live event revenue increased 9% to $13.5 million from $12.4 million in the prior year quarter. The staging of three additional events during the quarter and an 8% increase in average ticket price to $78.31 was partially offset by a 10% reduction in average attendance to approximately 5,700 fans.

Sir Mitch Says: Fun Fact: WWE’s Live event attendance dropped off by an almost identical amount between 2017’s Q4 and Q1 earlier this year. They increased ticket prices by 5% then too to offset any potential losses.