WWE issued the following:
WWE® Reports Record Second Quarter 2023 Results
08/02/2023
Second Quarter 2023 Highlights
Revenue was $410.3 million, an increase of 25% and a quarterly record; Operating income was $87.3 million, an increase of 26%; and Adjusted OIBDA1 was $140.7 million, an increase of 54% and a quarterly record
Returned $9.8 million of capital to shareholders through dividend payments
Viewership for WWE’s weekly flagship programs, SmackDown and Raw, increased 26% and 19%, respectively, in the P18-49 demo, significantly outperforming overall broadcast and cable television, which both declined 12%
Each WWE premium live event (WrestleMania, Backlash and Night of Champions) set global unique viewership records with year-over-year increases of 29%, 34% and 45%, respectively
Live Events revenue increased 51% over the prior year period, reflecting continued strong demand for domestic and international events. North American Live Event average attendance was 9,870, an increase of 45% and a quarterly record
In July, Money in the Bank was held at The O2 in London. Money in the Bank was WWE’s highest-grossing arena event in company history. Money in the Bank also set new records for viewership, sponsorship revenue, merchandise revenue and social media activity
WWE and Endeavor Transaction Highlights
As previously disclosed, on April 3, 2023, WWEand Endeavor announced an agreement to combine WWE and UFC to form a new, publicly listed company. The new company will be named “TKO Group Holdings, Inc.”
As previously disclosed, in June 2023, the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, expired. In addition, all required foreign regulatory approvals were obtained during the second quarter
The transaction is expected to close in the second half of 2023. The transaction is subject to the satisfaction of customary closing conditions
2023 Business Outlook2
The Company reaffirms its expectations for 2023, which target record revenue and an Adjusted OIBDA range of $395 to $410 million, which would be an all-time record
STAMFORD, Conn.–(BUSINESS WIRE)– WWE (NYSE: WWE) today announced financial results for its second quarter ended June 30, 2023.
“We generated strong financial results in the quarter, highlighted by record quarterly revenue and Adjusted OIBDA. Operationally, we continue to effectively execute our strategy, including staging the most successful WrestleMania of all time in early April. WrestleMania, as well as our other premium live events such as Backlash, Night of Champions and Money in the Bank all delivered record viewership. Our weekly flagship programs, Raw, SmackDown and NXT, delivered strong double-digit growth in viewership, significantly outpacing overall industry performance,” said Nick Khan, WWE Chief Executive Officer. “Strategically, in early April, we entered into a historic agreement with Endeavor to combine WWE with UFC to create a one-of-a-kind global sports and entertainment company. We believe that bringing these two iconic and highly complementary brands together will allow us to create incremental value for our shareholders.”
Frank Riddick, WWE President & Chief Financial Officer, added “In the quarter, we exceeded the high end of our guidance. Adjusted OIBDA was $141 million on revenue of $410 million. Our financial performance was favorably impacted by a shift in the timing of the staging of a large-scale international event. Our results in the quarter also reflected strong consumer demand for our live events, which benefited performance across our various lines of business.”
Second-Quarter Consolidated Results
Revenue increased 25%, or $82.1 million, to $410.3 million, primarily due to the timing of the staging of a large-scale international event, an increase in revenue related to the media rights fees for the Company’s premium live events and flagship weekly programming, and higher live events revenue.
Operating Income increased 26%, or $18.0 million, to $87.3 million, reflecting the increase in revenue partially offset by an increase in operating expenses. The increase in operating expenses primarily reflected an increase in content creation costs, including the timing of a large-scale international event, and the impact of certain costs related to the Company’s strategic alternatives review and recently announced agreement with Endeavor. (See the “WWE and Endeavor Transaction” discussion for further details.) The Company’s operating income margin remained flat at 21%.
Adjusted OIBDA increased 54%, or $49.2 million, to $140.7 million. The Company’s Adjusted OIBDA margin increased to 34% from 28%.
Net Income was $52.0 million, or $0.67 per diluted share, an increase from $49.0 million, or $0.58 per diluted share, primarily reflecting the increase in operating performance partially offset by an increase in the Company’s effective tax rate.
Cash flows generated by operating activities were $77.0 million, an increase from $56.9 million, primarily due to higher net income and lower working capital requirements.
Free Cash Flow3 was $31.1 million, an increase of $21.7 million from $9.4 million, primarily due to the increase in cash flows generated by operating activities. For the three months ended June 30, 2023, the Company incurred $31.7 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 June 30, 2023 was $62.8 million.
Cash, cash equivalents and short-term investments were $523.8 million as of June 30, 2023. The Company currently estimates debt capacity under its revolving line of credit of $200 million.
Results by Operating Segment
The schedule below reflects WWE’s performance by operating segment (in millions):
Media
Second-Quarter 2023
Revenue increased 32%, or $77.2 million, to $320.3 million, primarily due to the timing of a large-scale international event and, to a lesser extent, an increase in revenue related to the contractual escalation of media rights fees for the Company’s flagship weekly programming, Raw and SmackDown, and premium live events. During the quarter, approximately $7 million of incremental Network revenue was recorded as a result of a change in the premium live events calendar.
Operating income increased 37%, or $28.9 million, to $107.3 million, as the increase in revenue (as described above) was partially offset by an increase in operating expenses. The increase in operating expenses primarily reflected an increase in content creation costs, including the timing of a large-scale international event, as well as an increase in stock-based compensation.
Adjusted OIBDA increased 39%, or $35.4 million, to $126.1 million.
Live Events
Second-Quarter 2023
Revenue increased 51%, or $21.0 million, to $62.0 million, primarily due to an increase in ticket sales, both domestically and internationally, and an increase in advertising and sponsorship revenue. There were 53 total ticketed live events in the current quarter, consisting of 43 events in North America and 10 events in international markets. Average attendance at the Company’s North America events was approximately 9,900. In the prior year period, the Company staged 59 total ticketed live events, consisting of 55 events in North America and 4 events in international markets. Average attendance at the Company’s North America events was approximately 6,800.
Operating income increased 151%, or $19.9 million, to $33.1 million, as a result of the increase in revenues (as described above) and relatively flat event-related expenses.
Adjusted OIBDA increased 150%, or $20.7 million, to $34.5 million.
Consumer Products
Second-Quarter 2023
Revenue decreased 37%, or $16.1 million, to $28.0 million, primarily reflecting a decrease in licensing and eCommerce revenue. Licensing revenue primarily reflected a decrease in video gaming and collectibles revenue. The year-over-year change in eCommercerevenue reflected the previously disclosed transition of our digital retail platform to Fanatics.
Operating income decreased 30%, or $4.8 million, to $11.1 million, primarily reflecting the decrease in revenue (as described above) partially offset by a decrease in operating expenses. The decrease in operating expenses was primarily due to lower expenses related to the transition of eCommerce operations to Fanatics.
Adjusted OIBDA decreased 24%, or $4.0 million, to $12.5 million.
2023 Business Outlook2
In February, the Company issued its outlook for 2023 Adjusted OIBDA. The Company reaffirms its expectations for 2023 Adjusted OIBDA in the range of $395 – $410 million, which would be an all-time record result. The Company also reaffirms its expectation to generate record revenue in 2023. This anticipated performance reflects an expected increase in media rights fees for the Company’s flagship weekly programming and premium live events, as well as a full live events touring schedule, including two large-scale international events, and an increase in advertising and sponsorship revenues. The Company anticipates that 2023 operating expenses will reflect an increase in costs to support the creation of content partially offset by a decline in eCommerce and venue merchandise expenses, as a result of the transition of the Company’s digital retail platform and venue merchandise business to Fanatics, as well as a decline in third-party original programming expenses, due to the timing of the production of premium WWE-themed series and specials.
Third Quarter 2023 Business Outlook2
The Company estimates third quarter 2023 Adjusted OIBDA of $75 – $85 million. The Company also anticipates that third quarter results will reflect a year-over-year decrease in revenue. The decrease in revenue primarily reflects an expected decline in revenue at the Consumer Products segment and a decline in third-party original programming revenue, due to the timing of the production of premium WWE-themed series. The expected decline in Consumer Products revenue relates to the timing of revenue recorded as a result of the early termination of an agreement for our licensed collectibles, as well as the transition of the Company’s digital retail platform and venue merchandise business to Fanatics.
WWE and Endeavor Transaction
As previously disclosed, in January, Vincent K. McMahon, the Company’s Executive Chairman and shareholder with a controlling interest, along with WWE’s management team and Board of Directors, announced the intent to undertake a review of strategic alternatives with the goal of maximizing value for all WWE shareholders. On April 3, 2023, WWEand Endeavor Group Holdings, Inc. (“Endeavor”) announced an agreement to combine WWE and UFC to form a new, publicly listed company. The transaction is expected to close in the second half of 2023. The transaction is subject to the satisfaction of customary closing conditions. For the three and six months ended June 30, 2023, the Company’s consolidated pre-tax results included $18.8 million and $25.4 million, respectively, of expenses related to the strategic alternatives review and agreement with Endeavor.
Convertible Senior Notes
During the second quarter, the Company issued an aggregate of 8.5 million shares of its Class A common stock and paid approximately $4 million in cash, which represented the premium and accrued interest paid to investors, for approximately $211 million principal amount of its outstanding 3.375% Convertible Senior Notes due 2023 (the “Notes”). In connection with and following the issuance of the shares, the Company entered into agreements to terminate all of the convertible note hedge and warrant transactions that were previously entered into in connection with the issuance of the Notes. As a result of these terminations, the Company received net cash proceeds of approximately $51 million. For the three and six months ended June 30, 2023, the Company’s consolidated pre-tax results included a loss of $5.4 million associated with the cash premiums paid to investors in excess of the amount of cash or common stock issuable under the original terms of the Company’s convertible notes, as well as accrued interest and advisor fees incurred upon execution of the related conversions. As of June 30, 2023, an aggregate of approximately $4 million principal amount of the Notes remained outstanding.
Return of Capital to Shareholders
The Company returned $9.8 million of capital to shareholders in dividends in the second quarter of 2023. There were no share repurchases under the Company’s existing stock repurchase program in the second quarter of 2023. Under the Company’s existing stock repurchase program, approximately 5.3 million shares have been repurchased to-date at an average price of $54.09 per share. As of June 30, 2023, the Company had $211 million available under its existing $500 million stock repurchase authorization. As a result of the transaction with Endeavor (see the “WWE and Endeavor Transaction” discussion for further details), the Company currently has no plans to resume the program.
Other Matters
During the three and six months ended June 30, 2023, the Company incurred $5.3 million and $7.1 million, respectively, of expenses related to costs incurred in connection with and/or arising from the investigation conducted by the Special Committee of members of the Company’s Board of Directors, related revisions to the Company’s financial statements and other related matters. Mr. McMahon has agreed to review in good faith and reimburse the Company for all reasonable costs incurred in connection with and/or arising from the investigation conducted by the Special Committee, related revisions to the Company’s financial statements and other related matters. To date, Mr. McMahon has paid approximately $17.4 million to reimburse the Company for costs that have been incurred and paid by the Company. Please see the Company’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q for further details and ongoing risks regarding this matter.
Notes
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 non-recurring items that management deems would impact the comparability of results 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 8:30 a.m. ET on August 2, 2023, to discuss its second quarter 2023 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: 6100232). 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 August 2, 2023, 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.
