World Wrestling Entertainment (WWE) Misses Q2 EPS by 9c, Beats on Revenues; Raises FY18 Business Outlook

World Wrestling Entertainment (NYSE: WWE) reported Q2 EPS of $0.07, $0.09 worse than the analyst estimate of $0.16. Revenue for the quarter came in at $281.6 million versus the consensus estimate of $239.58 million.

Second Quarter 2018 Highlights

• Revenues increased 31% to $281.6 million, which was the highest quarterly revenue in WWE history
• Operating income nearly doubled to $21.2 million from $10.7 million in the prior year quarter
• Adjusted OIBDA1 increased 79% to $43.5 million
• WWE completed agreements with USA Network and Fox Sports, effective October 1, 2019, which increase the average annual value (AAV) of WWE’s U.S. distribution to 3.6 times that of the prior deal with NBCU
• WWE Network average paid subscribers2 increased 10% to 1.80 million paid subscribers, consistent with the Company’s guidance
• Digital engagement continued to grow through the first six months of 2018 with video views up 58% to 14.4 billion and hours consumed up 71% to 509 million across digital and social media platforms3

“We’re pleased with our continued success in increasing the monetization of WWE content globally,” said Vince McMahon, WWE Chairman and Chief Executive Officer. “This success is evidenced by the completion of our new U.S. distribution agreements with USA Network and Fox Sports, the staging of another record-breaking WrestleMania, and the development of a 10-year strategic partnership with the Saudi General Sports Authority.”

George Barrios, Co-President, added, “During the second quarter, we generated a 79% increase in Adjusted OIBDA. We are raising our 2018 Adjusted OIBDA target to a range of $160 million to $170 million, which would be an all-time record.4 By executing our strategy and engaging our passionate global fan base, we can continue to deepen the moat around our business. We believe this will enable us to drive long-term growth and shareholder value.”

2018 Business Outlook

In the first half of 2018, the Company achieved a 59% increase in Adjusted OIBDA to $78.7 million. In the second half of 2018, the Company expects Adjusted OIBDA to be relatively flat year-over-year. This includes projected third quarter Adjusted OIBDA of $30 million to $34 million and strong fourth quarter results.4 Based on its actual and projected performance, the Company is raising its target for 2018 Adjusted OIBDA to a range of $160 million to $170 million, which would be an all-time record, exceeding its previous guidance of at least $150 million.4

The Company’s guidance for the second half of 2018 assumes a continued rise in revenue, and the impact of increases in fixed costs, strategic investments, and higher management compensation based on 2018 overperformance. In addition to these items, projected third quarter results also reflect the unfavorable timing of various business initiatives. In the third quarter 2018, the Company also projects average paid subscribers of approximately 1.67 million, which represents a 10% increase from the third quarter 2017.

For earnings history and earnings-related data on World Wrestling Entertainment (WWE) click here.

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