WWE
WWE taping post-WrestleMania episode of RAW

WWE Reports Strong Third Quarter 2020 Earnings

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WWE issued the following:

WWE® Reports Strong Third Quarter 2020 Results

Maintains Solid Performance in Challenging Environment

Third Quarter 2020 Highlights*


* (All comparisons are versus the prior year period unless stated otherwise)


Revenue was $221.6 million, an increase of 19% or $35.3 million
Operating income was $63.4 million, an increase of nearly 9x or $57.0 million
Adjusted OIBDA1 was $84.3 million, an increase of more than 2x or $58.9 million
WWE ThunderDome debuted at the Amway Center in Orlando, Florida. It provides an interactive virtual experience for WWE fans and recreates the in-arena atmosphere (WWE has not performed an event with ticketed fans since mid-March 2020)
WWE Network average paid subscribers2 were 1.6 million, an increase of 6%
Digital video views were 9.2 billion, an increase of 3%, and hours consumed were 342 million, an increase of 3%, across digital and social media platforms3
eCommerce revenue was $9.1 million, an increase of 60%, offsetting the loss of venue merchandise sales due to 74 fewer events in the quarter
Business Outlook

The Company continues to adapt its business to the changing environment with investment to enhance content production value and further fan engagement, including an incremental $22 – $27 million investment in the fourth quarter (4Q20 vs. 3Q20), primarily associated with the creation of WWE ThunderDome, and increased personnel expenses as employees return from furlough
Management previously withdrew full year 2020 guidance. Based on sustained uncertainties related to the potential impact of COVID-19 on its business, WWE is not reinstating guidance at this time4
Management continues to believe WWE has significant long-term opportunities and is well positioned to deliver on its strategic initiatives (See COVID-19 Actions and Business Outlook on page 4)
STAMFORD, Conn.–(BUSINESS WIRE)– WWE (NYSE: WWE) today announced financial results for its third quarter ended September 30, 2020.

“Our third quarter financial performance was strong and reflected our ongoing creativity in a challenging environment,” said Vince McMahon, WWE Chairman & CEO. “We continue to adapt our business, as demonstrated by the creation of WWE ThunderDome, focusing on increasing audience interaction and engagement to support the value of our content globally.”


Kristina Salen, WWE Chief Financial Officer, added “In the quarter, we delivered revenue of $221.6 million and Adjusted OIBDA of $84.3 million based on increased rights fees for the Company’s flagship programming. With $638 million in cash and short-term investments at quarter-end, we believe WWE has substantial capital resources to manage challenges that may lie ahead and to deliver on key strategic initiatives.”


Third-Quarter Consolidated Results*

* (All comparisons are versus the prior year period unless stated otherwise)

Revenue was $221.6 million, an increase of 19% or $35.3 million, primarily driven by the growth of core content rights fees in the Media segment. This revenue increase was partially offset by the loss of ticket and merchandise sales that resulted from the continued cancellation, postponement and relocation of live events due to public health concerns related to the COVID-19 outbreak that began in mid-March 2020.

Operating Income was $63.4 million, an increase of nearly 9x or $57.0 million, primarily due to increased revenue from the growth of core content rights fees as well as a decline in event-related production expenses, and short-term cost reductions implemented as a result of COVID-19. The increase in operating income was partially offset by $5.5 million in severance expense resulting from a reduction in force due to COVID-19. The Company’s Operating income margin increased to 28.6%.

Adjusted OIBDA (which excludes stock compensation) was $84.3 million, an increase of more than 2x or $58.9 million. Adjusted OIBDA excludes $5.5 million in severance expense (described above). The Company’s Adjusted OIBDA margin increased to 38.0%.


Income Tax Provision was $13.0 million, an increase of $20.1 million. The increase was driven by stronger operating performance coupled with an $8.2 million decrease in tax benefits associated with the vesting of share-based compensation. The effective tax rate in the quarter was 21%.

Net Income was $48.2 million, or $0.57 per diluted share, an increase from $5.8 million, or $0.06 per diluted share, in the third quarter 2019, primarily reflecting stronger operating performance partially offset by the impact of the decrease in tax benefits as discussed above. Current period results also reflected after-tax unrealized gains of $5.2 million primarily related to the value of the Company’s DraftKings investment, partially offset by $4.3 million in after-tax severance expense (described above). Excluding these items, Adjusted Net Income5 was $47.3 million, or $0.56 per diluted share.

Cash flows generated by operating activities were $116.8 million, an increase from $3.2 million, driven by improved working capital, which reflects the timing of collections associated with our large-scale international events, and stronger operating performance.


Free Cash Flow was $110.8 million, an increase from a $16.4 million use of cash, primarily due to the change in operating cash flow and, to a lesser extent, a reduction in capital expenditures.6

Cash, cash equivalents and short-term investments were $638 million as of September 30, 2020, which includes $200 million the Company borrowed under its revolving line of credit during the second quarter 2020.

Return of Capital to Shareholders


The Company paid $9.3 million in dividends to shareholders during the third quarter. There were no share repurchases under the Company’s existing share repurchase program.

Basis of Presentation

For the third quarter of 2020, the Company’s consolidated pre-tax results included the impact of $6.7 million of unrealized gains primarily related to the value of the Company’s DraftKings investment, partially offset by $5.5 million in severance expense. For the nine month period ended September 30, 2020, the Company’s consolidated pre-tax results included $13.1 million of incremental costs related to the finance lease for the Company’s new headquarters, $5.5 million in severance expense, and a net gain of $2.9 million related to certain equity investments, which included unrealized holding gains of $14.4 million primarily related to the value of the Company’s DraftKings investment partially offset by $11.5 million of impairment charges. As the underlying market value of our marketable equity investments fluctuate, WWE is exposed to future earnings volatility to the extent WWE continues to hold these investments. A reconciliation of Net Income to Adjusted Net Income for the three and nine month ended September 30, 2020 and 2019 can be found in the supplemental schedule on page 13 of this release.

Results by Operating Segment*

* (All comparisons are versus the prior year period unless stated otherwise)

Media

Revenue was $201.0 million, an increase of 38% or $54.9 million, primarily driven by the growth of domestic core content rights fees for the Company’s flagship programs Raw and SmackDown and, to a lesser extent, the growth in WWE Network subscription revenue as well as increased sales of advertising and sponsorship across platforms. These factors were partially offset by the unfavorable timing of episodic series for programs, such as Total Divas and Miz & Mrs., as well as the timing and performance of WWE Studios’ portfolio of releases, as reflected in “Other.”

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