Yahoo Finance World Wrestling (WWE) Q1 Earnings Beat, Revenues Fall Y/Y
World Wrestling Entertainment, Inc. WWE posted first-quarter 2023 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. Markedly, total revenues and net income declined year over year.
On the earnings release, management highlighted that WrestleMania was the most viewed WWE premium live event of all time. WWE also announced an expansion of its partnership with Fanatics.
On Apr 3, 2023, WWE announced an agreement to combine WWE and UFC to form a new and publicly listed company. Upon close, Endeavor (parent company of UFC) will hold a 51% controlling interest and existing WWE shareholders will hold a 49% interest in the new company. The deal is expected to be completed in the second half of 2023.
World Wrestling Entertainment, Inc. Price, Consensus and EPS Surprise
World Wrestling Entertainment, Inc. price-consensus-eps-surprise-chart | World Wrestling Entertainment, Inc. Quote
Q1 Performance Insight
This Stamford, CT-based company reported first-quarter 2023 adjusted earnings of 50 cents a share, which beat the Zacks Consensus Estimate and our estimate of 42 cents. The quarterly earnings decreased significantly from 77 cents a share reported in the prior-year quarter.
WWE’s revenues of $297.6 million beat the consensus mark of $285 million and our estimate of $285.1 million. However, the metric declined 11% from the year-ago period. This can be attributed to a shift in the timing of the staging of a large-scale international event, which is expected to occur in the second quarter of 2023. This decrease was partially offset by an increase in revenues related to the contractual escalation of media rights fees for the company’s flagship weekly programing.
A Look at Margins
WWE’s operating income of $53.1 million declined 43% year over year due to a fall in production costs related to the timing of the company’s premium live events. We note that the operating income margin contracted to 18% from 28% in the year-ago quarter.
Adjusted OIBDA came in at $984.2 million, down 25% year over year. The adjusted OIBDA margin contracted to 28% from 34%.
Management expects second-quarter 2023 adjusted OIBDA between $125 million and $135 million, which represents an increase of approximately 37-48% from the prior-year quarter. The company also expects second-quarter results to reflect an increase in operating expenses, including certain costs to support the creation of content. For 2023, WWE projects adjusted OIBDA in the range of $395-$410 million for the full year.
Segment Details
Media Division: Revenues in the Media division declined 19% to $225.7 million. The year-over-year decrease was primarily due to a lack of large-scale international event.
Core content rights fees increased to $153.9 million from $139.1 million in the prior-year period. Network revenues came in at $51.4 million, down from $58.7 million reported in the year-ago quarter.
Meanwhile, advertising and sponsorship revenues declined to $15.6 million from $19.8 million in the year-ago period. Other media revenues declined to $4.8 million from $60.5 million in the prior-year period.
Live Events: Revenues from Live Events came in at $32.6 million, up 41% from the year-ago quarter’s figure. The upside can be attributed to a rise in North American ticket sales due to increases in both average attendance and average ticket price.
The company held 50 ticketed live events in the reported quarter consisting of 50 events in North America and no events in international markets. The average attendance at the North American events was roughly 7,850. North American ticket sales increased to $30.2 million from $19.9 million in the year-ago period. The segment’s adjusted OIBDA increased 150% to $7 million in the quarter under review.
Consumer Products Division: The segment’s revenues of $39.3 million increased 22% year over year. We note that consumer product licensing revenues came in at $26.8 million, up from $20 million in the year-ago period.
Meanwhile, e-commerce sales declined to $3.8 million from $7.7 million in the prior-year period. Venue merchandise sales jumped to $8.7 million from $4.5 million in the year-ago quarter.
Other Financial Details
WWE ended the quarter with cash and cash equivalents of $197.6 million, net short-term investments of $267.7 million, long-term debt of $20.7 million and stockholders’ equity of $586.7 million. Cash flow generated from operating activities during the quarter amounted to $12.6 million, while free cash flow was $20.6 million.
The company paid out $8.9 million to shareholders in dividends in the first quarter. WWE did not repurchase any shares during the quarter. As of Mar 31, 2023, the company had approximately $211 million remaining under its share repurchase authorization of $500 million.
Shares of this Zacks Rank #2 (Buy) company have surged 45.8% in the past six months compared with the industry’s growth of 15.5%.
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World Wrestling Entertainment, Inc. (WWE) : Free Stock Analysis Report
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