WWE issued the following:
WWE® Reports Third Quarter 2022 Results
11/02/2022
Third Quarter 2022 Highlights
- Revenue was $304.6 million, an increase of 19%; Operating Income was $58.9 million, a decrease of 8%; and Adjusted OIBDA1 was $91.2 million, an increase of 17%
- Returned $9.1 million of capital to shareholders through dividends paid
- Clash at the Castle, the first major WWE stadium event in the UK in over 30 years, was held at Principality Stadium in Cardiff, Wales. Clash at the Castle was the most viewed international event in WWE’s history
- Each WWE domestic premium live event (Money in the Bank, SummerSlam and Extreme Rules) was the most viewed event in its history with year-over-year increases of 17%, 20% and 36%, respectively, in domestic unique viewership on Peacock
- WWE announced a multi-year agreement with its long-standing partner, the Foxtel Group, to expand the distribution of the Company’s content in Australia
- WWE announced the creation of NXT Europe, which is planned to launch in 2023, to expand the NXT brand internationally
- In October, WWE announced its “Campus Rush” recruitment tour to further enhance the Company’s talent development program
2022 Business Outlook2
In February, the Company issued Adjusted OIBDA guidance of $360 – $375 million for the full year 2022. In August, the Company raised its guidance to $370 – $385 million. Based on performance through the first nine months of the year as well management’s current expectations for the fourth quarter, the Company now expects full year 2022 Adjusted OIBDA to be at the upper-end of the range of $370 – $385 million.
STAMFORD, Conn.–(BUSINESS WIRE)– WWE (NYSE: WWE) today announced financial results for its third quarter ended September 30, 2022.
“We generated strong financial results in the quarter, highlighted by record revenue and Adjusted OIBDA for a third quarter, and remain firmly on track to deliver record revenue and Adjusted OIBDA for the full year,” said Stephanie McMahon and Nick Khan, WWE co-Chief Executive Officers. “We continue to effectively execute our strategy, including staging a record-setting international stadium event, Clash at the Castle, in early September. Clash at the Castle, as well as our other premium live events (“PLEs”) including SummerSlam and Extreme Rules all continue our streak of delivering record viewership for each respective event. These PLEs, along with strong ratings for our flagship programs, Raw and SmackDown, continue to expand the reach of our brands and enhance the value of our content across various platforms, both domestically and abroad.”
Frank Riddick, WWE President & Chief Financial Officer, added “In the quarter, we exceeded our guidance. Adjusted OIBDA increased 17% reflecting 19% revenue growth over the prior year. Our financial performance was primarily driven by growth in our Media segment as well as a shift in the timing of revenue related to certain licensing agreements. These items more than offset an increase in certain costs to support the creation of content. For 2022, we now anticipate Adjusted OIBDA at the upper-end of the range of $370 to $385 million.”
Third-Quarter Consolidated Results
Revenue increased 19% to $304.6 million, primarily due to an increase in core content rights fees for the Company’s flagship programs, Raw and SmackDown, and the monetization of third-party original programming. To a lesser extent, higher consumer product licensing revenue and international ticket sales also contributed to the increase in revenue.
Operating Income decreased 8%, or $5.1 million, to $58.9 million, as the increase in revenue was offset by an increase in operating expenses. The increase in operating expenses was primarily driven by higher costs to support the creation of content as well as the impact of certain costs related to the Special Committee investigation. (See the “Special Committee Investigation” discussion for further details.) The Company’s operating income margin decreased to 19% from 25%.
Adjusted OIBDA (which excludes stock-based compensation and other items included in operating income) increased 17%, or $13.3 million, to $91.2 million. The Company’s Adjusted OIBDA margin remained flat at 30%.
Net Income was $41.7 million, or $0.49 per diluted share, a slight decline from $43.5 million, or $0.52 per diluted share in the third quarter of 2021, primarily reflecting the decrease in operating performance.
Cash flows generated by operating activities were $54.5 million, a slight decline from $56.9 million, primarily due to lower net income and higher working capital requirements.
Free Cash Flow3 was $3.5 million, a decrease from $44.8 million, primarily due to an increase in capital expenditures. For the three months ended September 30, 2022, the Company incurred $42.3 million of capital expenditures related to its new headquarter facility. Excluding the capital expenditures related to the new headquarter facility, Free Cash Flow for the three months ended September 30, 2022 was $45.8 million.
Return of Capital to Shareholders
The Company returned $9.1 million of capital to shareholders in dividends in the third quarter. There were no share repurchases under the Company’s existing share repurchase program. As of September 30, 2022, the Company had $210.9 million available under its existing $500 million stock repurchase authorization.
Results by Operating Segment
The schedules below reflect WWE’s performance by operating segment (in millions):
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2022 |
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2021 |
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2022 |
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2021 |
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Net Revenue: |
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Media |
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$ |
233.0 |
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$ |
202.7 |
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$ |
754.2 |
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$ |
678.6 |
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Live Events |
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35.2 |
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28.0 |
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99.3 |
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37.7 |
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Consumer Products |
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36.4 |
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25.1 |
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112.7 |
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68.6 |
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Total Net Revenue |
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$ |
304.6 |
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$ |
255.8 |
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$ |
966.2 |
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$ |
784.9 |
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Operating Income (Loss): |
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Media |
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$ |
86.1 |
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$ |
79.2 |
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$ |
281.9 |
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$ |
257.1 |
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Live Events |
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9.6 |
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9.1 |
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24.8 |
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5.5 |
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Consumer Products |
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18.5 |
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7.2 |
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45.6 |
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21.3 |
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Corporate |
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(55.3) |
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(31.5) |
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(131.7) |
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(108.5) |
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Total Operating Income |
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$ |
58.9 |
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$ |
64.0 |
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$ |
220.6 |
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$ |
175.4 |
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Adjusted OIBDA: |
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Media |
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$ |
93.9 |
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$ |
85.6 |
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$ |
312.8 |
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$ |
278.4 |
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Live Events |
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9.8 |
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9.3 |
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26.4 |
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6.1 |
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Consumer Products |
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18.8 |
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7.5 |
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47.2 |
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22.6 |
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Corporate |
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(31.3) |
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(24.5) |
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(92.0) |
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(77.2) |
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Total Adjusted OIBDA |
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$ |
91.2 |
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$ |
77.9 |
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$ |
294.4 |
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$ |
229.9 |
Media
Third-Quarter 2022
Revenue increased 15%, or $30.3 million, to $233.0 million, primarily due an increase in both domestic and international media rights fees related to the Company’s flagship programs, Raw and SmackDown. The increase was also related to the delivery of third-party original programming.
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2022 |
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2021 |
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2022 |
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2021 |
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Media Revenue: |
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Network (a) |
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$ |
46.5 |
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$ |
43.1 |
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$ |
166.5 |
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$ |
184.0 |
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Core content rights fees (b) |
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156.7 |
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141.3 |
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450.0 |
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422.8 |
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Advertising and sponsorship (c) |
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13.2 |
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16.1 |
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50.9 |
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50.4 |
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Other (d) |
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16.6 |
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2.2 |
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86.8 |
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21.4 |
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Total Revenue |
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$ |
233.0 |
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$ |
202.7 |
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$ |
754.2 |
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$ |
678.6 |
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(a) |
Network revenue consists primarily of license fees associated with the distribution of WWE Network content on the Peacock service in the U.S. (effective March 18, 2021), as well as subscription fees from customers of WWE Network and license fees associated with the Company’s international licensed partner agreements. Network revenue for the nine-month period ended September 30, 2021, includes the upfront revenue recognition related to the delivery of certain WWE Network intellectual property rights to Peacock. |
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(b) |
Core content rights fees consist primarily of licensing revenue from the distribution of the Company’s flagship programs, Raw and SmackDown, as well as its NXT programming, through global broadcast, pay television and digital platforms. |
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(c) |
Advertising and sponsorship revenue within the Media segment consists primarily of advertising revenue from the Company’s content on third-party social media platforms and sponsorship fees from sponsors who promote products utilizing the Company’s media platforms, including promotion on the Company’s digital websites and on-air promotional media spots. |
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(d) |
Other revenue within the Media segment reflects revenue from the distribution of other WWE content, including, but not limited to, certain live in-ring programming content in international markets, scripted, reality and other programming, as well as theatrical and direct-to-home video releases. |
Operating income increased 9%, or $6.9 million, to $86.1 million, as the increase in revenue (as described above) was partially offset by an increase in operating expenses. The increase in operating expenses was primarily driven by higher costs to support the creation of content.
Adjusted OIBDA increased 10%, or $8.3 million, to $93.9 million.
Live Events
Third-Quarter 2022
Revenue increased 26%, or $7.2 million, to $35.2 million, primarily due an increase in international ticket sales from the Company’s major stadium event, Clash at the Castle. There were 58 total ticketed live events in the current quarter, consisting of 57 events in North America and 1 international event. Average attendance at the Company’s North America events was approximately 6,300. In the prior year period, the Company returned to staging weekly, ticketed live events for the first time since the onset of the COVID-19 outbreak. In the prior year period, the Company staged 42 total ticketed live events, consisting of 38 events in North America and 4 events in international markets. Average attendance at the Company’s North America events was approximately 8,300, which reflected pent-up consumer demand as well as a higher mix of larger capacity venues.
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2022 |
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2021 |
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2022 |
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2021 |
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Live Events Revenue: |
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North American ticket sales |
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$ |
24.1 |
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$ |
23.8 |
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$ |
78.9 |
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$ |
30.5 |
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International ticket sales |
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8.0 |
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2.4 |
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10.2 |
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2.4 |
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Advertising and sponsorship (e) |
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1.3 |
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0.4 |
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4.0 |
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0.7 |
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Other (f) |
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1.8 |
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1.4 |
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6.2 |
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4.1 |
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Total Revenue |
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$ |
35.2 |
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$ |
28.0 |
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$ |
99.3 |
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$ |
37.7 |
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(e) |
Advertising and sponsorship revenue within the Live Events segment consists primarily of fees from advertisers and sponsors that promote products utilizing the Company’s live events (i.e., presenting sponsor of fan engagement events and advertising signage at events). |
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(f) |
Other revenue within the Live Events segment reflects revenue from the sale of travel packages associated with the Company’s global live events, commissions earned through secondary ticketing, and revenue from events for which the Company receives a fixed fee |
Operating income increased 5%, or $0.5 million, to$9.6 million, as the increase in revenues (as described above) was essentially offset by an increase in event-related expenses.
Adjusted OIBDA increased 5%, or $0.5 million, to $9.8 million.
Consumer Products
Third-Quarter 2022
Revenue increased 45%, or $11.3 million, to $36.4 million, primarily due to higher licensing revenue. During the quarter, approximately $10 million in revenue was recorded primarily as a result of the Company revising its estimates related to revenue recognition for certain licensing agreements with minimum guarantees. Prior to the change in estimates, the Company expected to recognize the majority (approximately $9 million) of this amount in the fourth quarter of 2022.
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2022 |
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2021 |
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2022 |
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2021 |
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Consumer Products Revenue: |
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Consumer product licensing |
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$ |
22.6 |
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$ |
11.6 |
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$ |
65.2 |
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$ |
33.9 |
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eCommerce |
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7.6 |
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8.2 |
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28.2 |
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28.1 |
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Venue merchandise |
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6.2 |
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5.3 |
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19.3 |
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6.6 |
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Total Revenue |
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$ |
36.4 |
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$ |
25.1 |
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$ |
112.7 |
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$ |
68.6 |
Operating income increased 157%, or $11.3 million, to $18.5 million, primarily reflecting the increase in revenue (as described above). Operating expenses were essentially flat as increases in variable costs associated with sales activity were substantially offset by lower expenses related to the transition of eCommerce operations to a third-party.
Adjusted OIBDA increased 151%, or $11.3 million, to $18.8 million.
2022 Business Outlook2
In February, the Company issued Adjusted OIBDA guidance of $360 – $375 million for the full year 2022. In August, the Company raised its guidance to $370 – $385 million. Based on performance through the first nine months of the year as well as management’s current expectations for the fourth quarter, the Company now expects full year 2022 Adjusted OIBDA to be at the upper-end of the range of $370 – $385 million. This range of anticipated performance reflects a full live events touring schedule, including a large-scale international event, and increased monetization of third-party original programming, partially offset by increased costs to support the creation of content.
Fourth Quarter 2022 Business Outlook2
The Company estimates fourth quarter 2022 Adjusted OIBDA of $83 – $90 million. The estimate reflects revenue growth primarily driven by an expected increase in media rights fees for the Company’s premium live events as well as an expected increase in the monetization of third-party original programming. Similar to the prior year quarter, the fourth quarter 2022 estimate reflects expected revenue from the staging of a large-scale international event. The Company anticipates that fourth quarter results will also reflect the negative impact of the previously mentioned shift of revenue into the third quarter related to certain licensing agreements with minimum guarantees, as well as an increase in operating expenses, including certain costs to support the creation of content.
Special Committee Investigation
As previously announced, a Special Committee of independent members of the Board of Directors was formed to investigate alleged misconduct by Vincent K. McMahon, the Company’s former Chairman and Chief Executive Officer, who resigned from all positions held with the Company on July 22, 2022 but remains a stockholder with a controlling interest, and another executive, who is also no longer with the Company. The Special Committee investigation is now complete and the Special Committee has been disbanded. Management is working with the Board to implement the recommendations of the Special Committee related to the investigation. For the three and nine-month periods ended September 30, 2022, the Company’s consolidated pre-tax results include the impact of $17.7 million and $19.4 million, respectively, associated with certain costs related to the investigation. Please see the Company’s SEC filings, including, but not limited to, its annual report on Form 10-K/A and quarterly reports on Form 10-Q/A and Form 10-Q for further details and ongoing risks regarding this matter.
Notes
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(1) |
The definition of Adjusted OIBDA can be found in the Non-GAAP Measures section of the release on page 7. A reconciliation of Operating Income to Adjusted OIBDA for the three and nine-month periods ended September 30, 2022 and 2021 can be found in the Supplemental Information in this release on page 14. |
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(2) |
The Company’s business model and expected results will continue to be subject to significant execution and other risks, including risks relating to the impact of COVID-19 on WWE’s business, results of operations and financial condition; entering, maintaining and renewing major distribution agreements; WWE Network; risks related to the resignation of Vincent K. McMahon and the potential impact of the investigation of alleged executive misconduct; uncertainties associated with international markets and risks inherent in large live events, and other risk factors disclosed in our annual report on Form 10-K/A for the year ended December 31, 2021. In addition, WWE is unable to provide a reconciliation of fourth quarter or full year 2022 guidance to GAAP measures as, at this time, WWE cannot accurately determine all of the adjustments that would be required. See Supplemental Information in this release on page 15 and Forward Looking Statements in this release on page 8. |
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(3) |
A reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow for the three and nine-month periods ended September 30, 2022 and 2021 can be found in the Supplemental Information in this release on page 16. |
Non-GAAP Measures
The Company defines Adjusted OIBDA as operating income excluding depreciation and amortization, stock-based compensation expense, certain impairment charges and other non-recurring items that management deems would impact the comparability of results between periods. Adjusted OIBDA includes amortization and depreciation expenses directly related to supporting the operations of our segments, including content production asset amortization, depreciation and amortization of costs related to content delivery and technology assets utilized for the WWE Network, as well as amortization of right-of-use assets related to finance leases of equipment used to produce and broadcast our live events. The Company believes the presentation of Adjusted OIBDA is relevant and useful for investors because it allows them to view the Company’s segment performance in the same manner as the primary method used by management to evaluate segment performance and to make decisions regarding the allocation of resources. Additionally, the Company believes that Adjusted OIBDA is a primary measure used by media investors, analysts and peers for comparative purposes.
Adjusted OIBDA is a non-GAAP financial measure and may be different from similarly titled non-GAAP financial measures used by other companies. WWE views operating income as the most directly comparable GAAP measure. Adjusted OIBDA (and other non-GAAP measures such as Adjusted Operating Income, Adjusted Net Income and Adjusted EPS which are defined as the GAAP measures excluding certain nonrecurring, material items that impact the comparability between periods) should not be considered in isolation from, or as a substitute for, operating income, net income, EPS or other GAAP measures, such as operating cash flow, as an indicator of operating performance or liquidity.
The Company defines Free Cash Flow as net cash provided by operating activities less cash used for capital expenditures. WWE views net cash provided by operating activities as the most directly comparable GAAP measure. Although it is not a recognized measure of liquidity under U.S. GAAP, Free Cash Flow provides useful information regarding the amount of cash WWE’s continuing business generates after capital expenditures and is available for reinvesting in the business, debt service, share repurchases and payment of dividends.
Additional Information
As previously announced WWE will host a conference call at 5:00 p.m. ET on November 2, 2022, to discuss its third quarter 2022 results. All interested parties are welcome to listen to a live webcast that will be hosted through the Company’s website at corporate.wwe.com/investors. Participants can access the conference call by dialing 1-855-200-4993 (toll free) or 1-323-794-2092 from outside the U.S. (conference ID for both lines: 5826559). Please reserve a line 5-10 minutes prior to the start time of the conference call.
The earnings presentation referenced during the call will be made available on November 2, 2022, at corporate.wwe.com/investors. A replay of the call will be available approximately two hours after the conference call concludes and can be accessed on the Company’s website.
Additional business metrics are made available to investors on the corporate website – corporate.wwe.com/investors.
