WWE Q2 2020 Financial Report: Quarterly revenue down from 2019, year to date revenue up 14%

WWE Q2 2020

WWE revealed the company’s second quarter results for 2020 on Thursday afternoon.

Q2 Highlights include:

— Revenues were down to $223.4 million as compared to $268.9 million from the prior year quarter. The company blames the timing of the Company’s large-scale event in Saudi Arabia the year before (WWE Super ShowDown). Revenues reached a record $514.4 million year-to-date, which is a 14% growth from the prior year period.

— Operating income increased to $55.7 million as compared to $17.1 million in the prior year quarter.

— WWE Network average paid subscribers declined 1.5% to 1.66 million while ending paid subscribers increased 6% to 1.69 million.

— Digital video views increased 10% to 9.9 billion, a record for the Company, and hours consumed increased 15% to 374 million across digital and social media platforms, another record for the Company.

— In the face of the COVID-19 pandemic, the Company’s short-term cost reductions and cash flow improvements led to enhanced liquidity.

— The Company is continuing to adapt its business to the changing environment by enhancing the production of content and furthering fan engagement.

WWE Chairman and CEO Vince McMahon was quoted in the press release putting over the second quarter financial performance in spite of the challenges posed by COVID-19:

“Our second quarter financial performance was strong and demonstrated our ability to respond to the challenges posed by COVID-19. We continue to adapt our business to the changing environment, focusing on the development of new content for global distribution platforms and increasing audience engagement to drive growth and value for our shareholders.”

You can view the press release below:

WWE® Reports Strong Second Quarter 2020 Results

STAMFORD, Conn., July 30, 2020 – WWE (NYSE: WWE) today announced financial results for its second quarter ended June 30, 2020.

“Our second quarter financial performance was strong and demonstrated our ability to respond to the challenges posed by COVID-19,” said Vince McMahon, WWE Chairman & CEO. “We continue to adapt our business to the changing environment, focusing on the development of new content for global distribution platforms and increasing audience engagement to drive growth and value for our shareholders.”

Frank Riddick, interim Chief Financial Officer, added “In the quarter, we delivered revenue of $223 million and Adjusted OIBDA of $73.5 million as we continued to offset the impact of cancelled events by reducing costs. Our cash flow remains strong, and we believe we have the capital resources to deliver on our strategic initiatives and growth opportunities.”

Second-Quarter Consolidated Results

Revenues decreased 17% to $223.4 million from $268.9 million in the prior year quarter primarily driven by decreased sales of tickets and merchandise that resulted from the cancellation, postponement and relocation of live events due to public health concerns related to the COVID-19 outbreak. Media segment revenue increased modestly as the escalation of core content rights fees was substantially offset by the unfavorable timing of the Company’s large-scale event in Saudi Arabia (held in February 2020 vs. June 2019).

Operating Income was $55.7 million as compared to $17.1 million in the prior year quarter, primarily due to a decline in operating expenses that reflected lower content-related production and event costs, short-term cost reductions implemented as a result of the COVID-19 outbreak and, to a lesser extent, a year-over-year reduction in accrued management incentive compensation. The decline in operating expenses was partially offset by a decrease in revenue (as described above). The Company’s Operating income margin increased to 25% from 6% in the prior year quarter.

Adjusted OIBDA (which excludes stock compensation) increased to $73.5 million from $34.6 million in the prior year quarter. The Company’s Adjusted OIBDA margin increased to 33% from 13%.

Net Income reached $43.8 million, or $0.52 per diluted share, from $10.4 million, or $0.11 per diluted share, in the second quarter 2019, primarily reflecting improved operating performance. Current period results also included $7.7 million in an unrealized gain related to a certain equity investment as well as a lower effective tax rate, which were partially offset by the impact of the finance lease that commenced in July 2019 related to the Company’s new headquarters. Excluding the impact of an unrealized gain on a certain equity investment, Adjusted Net Income4 was $37.7 million, or $0.45 per diluted share.

Effective Tax Rate decreased to 20% from 25% in the prior year quarter, primarily driven by increased deductibility of foreign derived intangible income.

Cash flows generated by operating activities reached $74.8 million as compared to $7.6 million of cash used in operating activities in the prior year quarter driven by stronger operating performance as well as improved working capital reflecting the timing of collections in the prior year quarter.

Free Cash Flow totaled $67.7 million as compared to a $27.5 million use of cash in the second quarter 2019 primarily due to the change in operating cash flow and, to a lesser extent, a reduction in capital expenditures.

Cash, cash equivalents and short-term investments were $548 million as of June 30, 2020, which includes $200 million in cash the Company borrowed under its revolving line of credit during the second quarter 2020.

Return of Capital to Shareholders

For the second quarter 2020, the Company paid $9.3 million in dividends to shareholders.

Management may resume the Company’s $500 million share repurchase program, which was temporarily suspended in April 2020. WWE share repurchases under the program will be executed opportunistically, i.e., when the repurchase price is below WWE’s intrinsic value as conservatively estimated by management. Any repurchase activity will be subject to WWE’s business outlook and liquidity as well as whether share repurchases compare favorably to other capital allocation alternatives.

Click here to view full Press Release

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