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World Wrestling (WWE) Misses on Q3 Earnings & Revenues
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World Wrestling Entertainment Inc. reported a negative earnings surprise for the second consecutive quarter. The company posted earnings per share of 14 cents for third-quarter 2016, flat year over year but below the Zacks Consensus Estimate of 18 cents.
WWE’s revenues of $164.2 million came in well below the Zacks Consensus Estimate of $181 million and fell 1.2% year over year primarily due to a 5.9% decline in North America. However, revenues outside North America surged 13% buoyed by increased monetization of content as well as by a rise in Live Event revenues mainly in the EMEA and APAC areas.
The number of paid average subscribers increased 24% in third-quarter 2016 to more than 1.46 million. Further, WWE Network is available in the Indian Subcontinent, Germany, Malaysia, Austria, Switzerland and Japan.
Revenues from North America declined 5.9% to $118.5 million, whereas revenues from Europe/Middle East/Africa (EMEA) improved 8.8% to $24.7 million. The Asia Pacific (APAC) and Latin America generated revenues of $18.5 million and $2.5 million, which represent a gain of 16.4% and 47.1%, respectively.
Management is strengthening and expanding the WWE Network through the creation of new content and implementation of programs which will ensure higher customer attraction and retention power, introduction of new features, expansion of distribution platforms, along with expansion into new regions.
Segmental details:
Media Division: Revenues from the company’s Media division decreased 4% to $110.4 million mainly due to the effect of certain television programming. Network revenues jumped 10.3% to $45.1 million and Digital Media revenues surged 12.1% to $6.5 million. On the other hand, Television and Home Entertainment revenues came in at $56.3 million and $2.5 million, down 13.7% and 16.7%, respectively. The increase in Network revenues was primarily due to an 18% surge in subscription revenues.
Live Events: Revenues from Live Events climbed 10% to $28.6 million driven by five additional international events which were held during the reported quarter. A total of 82 events took place in the third quarter, which includes 71 events in North America and 11 internationally. In the prior-year quarter, there were 85 events in total, including 79 in North America and 6 globally. North American live event revenues came in at $21 million, flat year over year. On the other hand, International live event revenues soared 56% year over year to $7 million.
Consumer Product Division: This segment’s revenues fell 4% to $21.6 million primarily due to a 22% decline in licensing revenues to $9 million.
WWE Studios: The segment reported revenue growth of 47.1% of $2.5 million.
Other Financial Details
WWE ended the quarter with cash and cash equivalents of $11.5 million, long-term debt of $36.7 million and shareholders’ equity of $220 million. Corporate and other expenses came in at $44.8 million as against $41.9 million in the prior-year quarter. At the end of the third quarter, the company had free cash flow of $8.6 million compared with a negative $1.1 million in the year-ago quarter.
For fourth-quarter 2016, WWE anticipates average paid subscribers of 1.40 million, signifying a year-over-year decrease of nearly 13% and 4% sequentially. Adjusted OBIDA is projected in the range of $20–$24 million.
2017 Outlook
The company provided its 2017 guidance. Management is optimistic about achieving another great year of revenues and adjusted OIBDA growth. The company is targeting adjusted OIBDA of $100 million, which is nearly 20% up from the 2016 projection of $80 million to $84 million. Operating income is likely to be $70 million.
Further, WWE expects a contractual rise in television right fees from important distribution agreements and believes that the company will continue to add more WWE Network subscribers but at a lower rate on a year-over-year basis.
Zacks Rank & Key Picks
WWE currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the space include Time Inc. (TIME - Free Report) , New Media Investment Group Inc. and Nexstar Broadcasting Group, Inc. (NXST - Free Report) .
Time has surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average estimate of 10%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
New Media Investment Group has topped the estimate in the trailing four quarters, with an average estimate of 7.5% and it currently has a Zacks Rank #2 (Buy).
Nexstar Broadcasting Group has long-term earnings growth rate of 6.5% and it carries a Zacks Rank #2.
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World Wrestling (WWE) Misses on Q3 Earnings & Revenues
World Wrestling Entertainment Inc. reported a negative earnings surprise for the second consecutive quarter. The company posted earnings per share of 14 cents for third-quarter 2016, flat year over year but below the Zacks Consensus Estimate of 18 cents.
WWE’s revenues of $164.2 million came in well below the Zacks Consensus Estimate of $181 million and fell 1.2% year over year primarily due to a 5.9% decline in North America. However, revenues outside North America surged 13% buoyed by increased monetization of content as well as by a rise in Live Event revenues mainly in the EMEA and APAC areas.
The number of paid average subscribers increased 24% in third-quarter 2016 to more than 1.46 million. Further, WWE Network is available in the Indian Subcontinent, Germany, Malaysia, Austria, Switzerland and Japan.
Revenues from North America declined 5.9% to $118.5 million, whereas revenues from Europe/Middle East/Africa (EMEA) improved 8.8% to $24.7 million. The Asia Pacific (APAC) and Latin America generated revenues of $18.5 million and $2.5 million, which represent a gain of 16.4% and 47.1%, respectively.
Management is strengthening and expanding the WWE Network through the creation of new content and implementation of programs which will ensure higher customer attraction and retention power, introduction of new features, expansion of distribution platforms, along with expansion into new regions.
Segmental details:
Media Division: Revenues from the company’s Media division decreased 4% to $110.4 million mainly due to the effect of certain television programming. Network revenues jumped 10.3% to $45.1 million and Digital Media revenues surged 12.1% to $6.5 million. On the other hand, Television and Home Entertainment revenues came in at $56.3 million and $2.5 million, down 13.7% and 16.7%, respectively. The increase in Network revenues was primarily due to an 18% surge in subscription revenues.
Live Events: Revenues from Live Events climbed 10% to $28.6 million driven by five additional international events which were held during the reported quarter. A total of 82 events took place in the third quarter, which includes 71 events in North America and 11 internationally. In the prior-year quarter, there were 85 events in total, including 79 in North America and 6 globally. North American live event revenues came in at $21 million, flat year over year. On the other hand, International live event revenues soared 56% year over year to $7 million.
Consumer Product Division: This segment’s revenues fell 4% to $21.6 million primarily due to a 22% decline in licensing revenues to $9 million.
WWE Studios: The segment reported revenue growth of 47.1% of $2.5 million.
Other Financial Details
WWE ended the quarter with cash and cash equivalents of $11.5 million, long-term debt of $36.7 million and shareholders’ equity of $220 million. Corporate and other expenses came in at $44.8 million as against $41.9 million in the prior-year quarter. At the end of the third quarter, the company had free cash flow of $8.6 million compared with a negative $1.1 million in the year-ago quarter.
WORLD WRESTLING Price, Consensus and EPS Surprise
WORLD WRESTLING Price, Consensus and EPS Surprise | WORLD WRESTLING Quote
Outlook
For fourth-quarter 2016, WWE anticipates average paid subscribers of 1.40 million, signifying a year-over-year decrease of nearly 13% and 4% sequentially. Adjusted OBIDA is projected in the range of $20–$24 million.
2017 Outlook
The company provided its 2017 guidance. Management is optimistic about achieving another great year of revenues and adjusted OIBDA growth. The company is targeting adjusted OIBDA of $100 million, which is nearly 20% up from the 2016 projection of $80 million to $84 million. Operating income is likely to be $70 million.
Further, WWE expects a contractual rise in television right fees from important distribution agreements and believes that the company will continue to add more WWE Network subscribers but at a lower rate on a year-over-year basis.
Zacks Rank & Key Picks
WWE currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the space include Time Inc. (TIME - Free Report) , New Media Investment Group Inc. and Nexstar Broadcasting Group, Inc. (NXST - Free Report) .
Time has surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average estimate of 10%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
New Media Investment Group has topped the estimate in the trailing four quarters, with an average estimate of 7.5% and it currently has a Zacks Rank #2 (Buy).
Nexstar Broadcasting Group has long-term earnings growth rate of 6.5% and it carries a Zacks Rank #2.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>