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World Wrestling (WWE) Q3 Earnings Top Estimates, Revenues Lag
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After witnessing a negative earnings surprise in the second quarter of 2018, World Wrestling Entertainment, Inc. delivered an earnings beat in the third quarter. However, net revenues fell short of the Zacks Consensus Estimate after surpassing the same in the preceding quarter. Notably, both the top and bottom lines improved year over year. Clearly, the company’s effort to focus on increasing original content production, localization and strategic initiatives bode well.
This integrated media and entertainment company delivered third-quarter adjusted earnings of 35 cents a share that surpassed the Zacks Consensus Estimate of 21 cents and surged considerably from 28 cents reported in the year-ago period.
WWE’s revenues of $188.4 million increased marginally by 1% but came below the Zacks Consensus Estimate of $203.1 million. Management pointed that top line benefited from increased monetization of content. However, this was offset by fall in ticket sales at live events and adverse impact of the adoption of the new FASB standard (ASC Topic 606) on licensing revenue.
Total adjusted OBIDA plunged roughly 21% to $35.8 million during the quarter, whereas adjusted OBIDA margin contracted 550 basis points to 19%. However, adjusted OBIDA surpassed management’s earlier provided guidance range of $30-$34 million.
The company continues to envision full year 2018 adjusted OIBDA in the band of $160-$170 million. Management envisions significant revenue growth in the final quarter on account of rise in content rights fees and the positive timing of licensing revenue related to the implementation of a new FASB standard (ASC Topic 606). The company anticipates fourth quarter adjusted OIBDA in the band $45-$55 million.
Management is strengthening and expanding WWE Network through creation of new content along with implementation of programs which will have higher customer attraction and retention power. Further, the introduction of new features, expansion of distribution platforms and foraying into new regions will aid the drive. The company is increasing the monetization of WWE content worldwide. With revenue expected to increase considerably courtesy of new U.S. distribution agreements, management is aiming to attain adjusted OIBDA of at least $200 million for 2019.
This Zacks Rank #3 (Hold) stock has surged 92% in the past six months, comfortably outperforming the industry that gained 16%.
Segmental Details
Media Division: Revenues from the Media division rose 9% to $142.1 million owing to core content rights fees, specifically license fees related to the Raw and SmackDown, and the production and monetization of programming, comprising the launch of Miz & Mrs. WWE Network’s live in-ring content and original series draw viewers’ attention. The company launched new weekly series, NXT UK. We note that revenues from advertising and sponsorship grew 15%, core content rights fees jumped 9%, while Network revenue rose 2% during the quarter.
The number of average paid subscribers climbed 9% year over year in the quarter to more than 1.66 million. Management now envisions average paid subscribers of approximately 1.56 million for the final quarter, reflecting an increase of 8% from the prior-year period. During the first nine months of 2018, digital video views surged 61% to 22.9 billion, while hours consumed soared 81% to 842 million across digital and social media platforms.
Live Events: Revenues from Live Events came in at $26.7 million, down about 16% from the prior-year quarter. The company highlighted that decline in the average ticket price at events in international markets and fall in average attendance for the events globally adversely impacted revenues.
A total of 90 events (excluding NXT) took place in the quarter — 86 in North America and four in international markets. In the prior-year quarter, there were 96 events, of which 89 were held in North America and seven in international markets. North American ticket sales fell $2.9 million to $22.4 million on account of three less events and an 8% drop in average attendance to 4,500. The average ticket price of $53.68, remains flat. International live event revenue plunged more than 50% to $2.3 million due to 13% fall in average ticket price to $93.18 and 18% fall in average attendance to about 5,600.
Consumer Products Division: The segment’s revenues came in at $19.6 million, down 18% year over year owing to the adoption of a new FASB standard (ASC Topic 606). This hurt the licensing revenue by $2.6 million and to some extent reduced sales of merchandise at WWE venues and e-commerce site, WWE Shop.
Other Financial Details
WWE ended the quarter with cash and cash equivalents of $126.1 million, long-term debt of $27 million and shareholders’ equity of $279.2 million. In the quarter, the company generated free cash flow of $35.5 million.
CenturyLink, Inc. , a Zacks Rank #2 company, delivered an average positive earnings surprise of 13.7% in the trailing four quarters.
Sirius XM Holdings Inc. (SIRI - Free Report) , a Zacks Rank #2 company, has a long-term earnings growth rate of 15%.
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World Wrestling (WWE) Q3 Earnings Top Estimates, Revenues Lag
After witnessing a negative earnings surprise in the second quarter of 2018, World Wrestling Entertainment, Inc. delivered an earnings beat in the third quarter. However, net revenues fell short of the Zacks Consensus Estimate after surpassing the same in the preceding quarter. Notably, both the top and bottom lines improved year over year. Clearly, the company’s effort to focus on increasing original content production, localization and strategic initiatives bode well.
This integrated media and entertainment company delivered third-quarter adjusted earnings of 35 cents a share that surpassed the Zacks Consensus Estimate of 21 cents and surged considerably from 28 cents reported in the year-ago period.
WWE’s revenues of $188.4 million increased marginally by 1% but came below the Zacks Consensus Estimate of $203.1 million. Management pointed that top line benefited from increased monetization of content. However, this was offset by fall in ticket sales at live events and adverse impact of the adoption of the new FASB standard (ASC Topic 606) on licensing revenue.
Total adjusted OBIDA plunged roughly 21% to $35.8 million during the quarter, whereas adjusted OBIDA margin contracted 550 basis points to 19%. However, adjusted OBIDA surpassed management’s earlier provided guidance range of $30-$34 million.
The company continues to envision full year 2018 adjusted OIBDA in the band of $160-$170 million. Management envisions significant revenue growth in the final quarter on account of rise in content rights fees and the positive timing of licensing revenue related to the implementation of a new FASB standard (ASC Topic 606). The company anticipates fourth quarter adjusted OIBDA in the band $45-$55 million.
Management is strengthening and expanding WWE Network through creation of new content along with implementation of programs which will have higher customer attraction and retention power. Further, the introduction of new features, expansion of distribution platforms and foraying into new regions will aid the drive. The company is increasing the monetization of WWE content worldwide. With revenue expected to increase considerably courtesy of new U.S. distribution agreements, management is aiming to attain adjusted OIBDA of at least $200 million for 2019.
This Zacks Rank #3 (Hold) stock has surged 92% in the past six months, comfortably outperforming the industry that gained 16%.
Segmental Details
Media Division: Revenues from the Media division rose 9% to $142.1 million owing to core content rights fees, specifically license fees related to the Raw and SmackDown, and the production and monetization of programming, comprising the launch of Miz & Mrs. WWE Network’s live in-ring content and original series draw viewers’ attention. The company launched new weekly series, NXT UK. We note that revenues from advertising and sponsorship grew 15%, core content rights fees jumped 9%, while Network revenue rose 2% during the quarter.
The number of average paid subscribers climbed 9% year over year in the quarter to more than 1.66 million. Management now envisions average paid subscribers of approximately 1.56 million for the final quarter, reflecting an increase of 8% from the prior-year period. During the first nine months of 2018, digital video views surged 61% to 22.9 billion, while hours consumed soared 81% to 842 million across digital and social media platforms.
Live Events: Revenues from Live Events came in at $26.7 million, down about 16% from the prior-year quarter. The company highlighted that decline in the average ticket price at events in international markets and fall in average attendance for the events globally adversely impacted revenues.
A total of 90 events (excluding NXT) took place in the quarter — 86 in North America and four in international markets. In the prior-year quarter, there were 96 events, of which 89 were held in North America and seven in international markets. North American ticket sales fell $2.9 million to $22.4 million on account of three less events and an 8% drop in average attendance to 4,500. The average ticket price of $53.68, remains flat. International live event revenue plunged more than 50% to $2.3 million due to 13% fall in average ticket price to $93.18 and 18% fall in average attendance to about 5,600.
Consumer Products Division: The segment’s revenues came in at $19.6 million, down 18% year over year owing to the adoption of a new FASB standard (ASC Topic 606). This hurt the licensing revenue by $2.6 million and to some extent reduced sales of merchandise at WWE venues and e-commerce site, WWE Shop.
Other Financial Details
WWE ended the quarter with cash and cash equivalents of $126.1 million, long-term debt of $27 million and shareholders’ equity of $279.2 million. In the quarter, the company generated free cash flow of $35.5 million.
Key Picks
The E.W. Scripps Company (SSP - Free Report) has a long-term earnings growth rate of 10.5% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CenturyLink, Inc. , a Zacks Rank #2 company, delivered an average positive earnings surprise of 13.7% in the trailing four quarters.
Sirius XM Holdings Inc. (SIRI - Free Report) , a Zacks Rank #2 company, has a long-term earnings growth rate of 15%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>