WWE Q2 2021 earnings report and conference call summary

WWE reports Q2 revenue of $265.5 million and EPS of $0.34.

WWE beats analyst expectations on revenue by $5 million and EPS by 11 cents.

I estimated $261 million revenue and $0.33 EPS. Higher than all other analysts on the latter.

Earnings press release:

Other measures of profit:

Net income for the quarter was $29.2M, down from $43.8M prior year.

Operating income $46.5M, down from $55.7M.

WWE saved enormously in Q2 2020 when they ran TV in the Performance Center. Q2 2021 profitability is well above Q2 2019.

The press release notes WWE spent $18.8 million toward its stock buyback program, as a way to return value to shareholders in addition to the quarterly dividend.

My note: WWE laid off a number of employees and talent during the quarter as well to cut expenses.

Wrestlemania live event business. Footnote in the KPIs notes WM was attended by approximately 20,200 fans each night.

WWE reports $6.7 million in live event revenue for the quarter in which WM were the only events.

I reported in April paid att of 20,172 and 20,634 & $6.2M gate.

What were merchandise sales like for Wrestlemania?

WWE reports $1.3 million in venue merch, the first time that line has any value in it since Q1 2020. This would indicate merch per paid ticket of around $32.

Trending schedules:

Conference call will begin at the top of the hour. Anyone can login and listen here:

https://streaming.webcasts.com/starthere.jsp?ei=1415044&tp_key=0b55bc9719

Business Outlook section of the earnings release.

WWE isn't changing its $270M to $305M adjusted OIBDA (the company's non-GAAP favorite profit metric) for 2021, citing caution related to Covid-19.

WWE anticipates resuming the new HQ buildout in the second half of this year.

The call is beginning. SVP Michael Weitz opens the call with a welcome, introduction, and forward-looking statements disclaimer as normal.

I will note statements from WWE executives. In most cases this won't be direct quotes but paraphrasing and summaries.

Vince McMahon says "we have advances for our live events that look excellent". TV ratings are up.

Short comments as usual and he hands off to Nick Khan.

Nick Khan gives a summary of media industry. Says he'll outline recent deals and how it shows there's a premium on live content. Stephanie will talk about sponsorship segment.

Khan says Disney renewed Wimbledon. Red Bird Capital acquired stake in IPL cricket team. We see similar growth in our own international deal, including Foxtel in Australia.

Ratings are up across all shows following return of live fans. Stephanie will talk ratings growth soon.

Khan talks about Peacock. Viewership of PPV events are up 26% (Backlash), 25% (Hell in a Cell), and 46% (MITB) from prior year performance on standalone WWE Network.

Return to touring. One nuisance to note. This was not a return to live events. We held events via video screens. Not one week of production missed. It felt great for fans, superstars.

A taste of how live evnts are performing. Houston sold-out. Highest grossing non PPV event in Houston.

Live merch sales were up 50% versus previous event in Houston. Keep in mind eCommerce sales have grown since then.

Merch sales for Fort Worth (MITB PPV) were almost 100% greater. These events sold out prior to John Cena's reappearance.

Merch sales for Dallas (Raw) were almost 50% greater than last time in Dallas.

In Cleveland (SD) highest grossing non-PPV gate in Cleveland.

Khan talks WWE having 2 matches at Rolling Loud festival. Almost all fans were under the age of 25. "We saw strong merchandise sales there as well."

Pittsburgh house show was the strongest gate for WWE non-televised event in history in Pittsburgh.

Summerslam takes place from NFL stadium in Las Vegas on Saturday Aug 21. A new night for us (Sat). Without a main event or card announced we sold over 40,000 of 45,000 tickets.

Still Khan: New Years Day PPV in Atlanta. College football championship games are NYE. NFL is not playing that day. So we saw an opening on the sports calendar. We believe ticket sales and viewership will be indicative of that. Rest of the PPV calendar is coming shortly.

We announced our first ever ring announcer competition on TikTok. Winners announce a match at Summerslam. Already 9 million views.

Our 2nd NFT drop leads into Summerslam. This time with John Cena. Follows Undertaker NFT launch before Wrestlemania.

Khan talks about United States vs. Vince McMahon limited series announcement.

He turns the call over to Stephanie McMahon.

Stephanie talks fan return. She and HHH visited fans before first event with fans. Energy and excitement. The Summer of Cena. NBCU and Fox support return with different campaigns across programming.

WWE applied key learnings, upgraded audio and visual experience. Talks new set.

Steph: Costs associated per episode are on par with 2019 costs of production. July 16 generated 21% YOY increase and 42% increase in "coveted 18-49 demo".

Raw was up 8% YOY and 15% in 18-49.

Steph: TV viewership remained stable, maintaining trend since Thunderdome. From that time from end of Q2. Raw increased moderately and Smackdown increased 7%.

Digital consumption increased 5% to 394M hours. Views increased to 11.2B. 3x increase in Facebook hours.

Steph talks A&E programming. WWE increased 18-49 for A&E.

Sales and sponsorship revenue increase YOY. WWE goes well beyond generating impressions. Customized content ex across multiple lines of business. Utilizing WWE superstars that resonate.

Stephanie praises the Army of the Dead tie-in at Backlash. "Zombies randomly appeared in backstage scenes and popped up around the ring…"

3 of 14 trending topics were tied to the integration. Played significantly role in becoming one of the top movies in Netflix history.

Purelife (water brand) is activating across WWE. Sponsoring Summerslam after party hosted by Tiffany Haddish.

Stephanie talks how WWE's 2020 community action report shows WWE delivers on mission of putting smiles on people's faces.

She turns over to CFO Kristina Salen.

Salen goes over financial highlights in slides. She mentions employees returned from furlough.

Related severance expense of $8.1 million (from layoffs) was excluded in formulation of adjusted OIBDA.

Production expense for Raw and Smackdown will decline with return to touring, Salen says.

My note: In other words, touring is less expensive than Thunderdome.

There was a modest decrease in eCommerce merchandise sales in YOY comparison versus early pandemic, offset by first venue merch revenues since Covid.

Much of Salen's comments consist of reviewing details in the earnings release noted earlier in this thread. Her comments will likely be followed by Q&A with stock analysts.

Notably there's been no mention of a "large-scale international event" (Saudi Arabia event) yet. ( = $50 million in revenue)

The 56-page quarterly report (10-Q) has been published:

https://otp.tools.investis.com/clients/us/wwe/SEC/sec-show.aspx?FilingId=15122038&Cik=0001091907&Type=PDF&hasPdf=1

Q&A begins. First question from David Karnovsky from JPMorgan.

Soccer rights are having an uptick w/ streaming bids. How do you view WWE as similar?

Khan says soccer is #1 sport globally. We see positive not equal to soccer but appeal on the scale. La Liga rights deal high for deal outside U.S. … We think there are more of those deals out there.

JPMorgan asks Salen about number of events for 2021. She says guidance does include "large-scale international events".

Salen says at or below second-half of 2019. Schedule announcements are coming shortly.

Curry Baker from Guggenheim asks on sponsorship, what's size of opportunity next 2-3 years. Areas for increase in monetization?

Stephanie says tough to give projections but we believe significant upside. Peacock increases sponsorship. On digital and social opportunities.

Any update on the MENA TV rights deal? Still in conversations?

Khan says Vince, myself others still into it. Optimistic on the situation. Hope to have some news shortly.

Eric Handler from MKM asks about out of ring TV production plans. How many hours? Preselling these so no risk? Profit centers rather than promotional tools?

Khan says "Yes to all of that… meaning profit center, promotional tools". A&E ratings were good. Look for more.

Handler asks about new HQ. How's capex cadence in 2022. When does it start to decline? Previous plan was to sell existing HQ and off site facility. That still a goal?

Salen says on prior Q, expectation is not to take financial risk like a TV studio would re: out of ring content.

Salen says supply chains are backed up so to meet timeline we need to order materials sooner so they arrive on time in 2022. We anticipate moving to new HQ in Q4 2022. Already broken ground in June. Capex will taper through 2022.

Salen anticipates selling existing buildings.

Brandon Ross from LightShed follows up on sponsorship. With touring return does it go up right away or come in time?

Steph says return to events increases opportunity but that hasn't stopped us from growing sales/sponsorship business. We've seen increases across business.

Ross asks Vince AEW seems to be making significant investments in roster and has gained in viewership esp in demo. How do you view them as competitor? Rising Tide?

Vince says it's not a situation where rising tide because Ted Turner was coming after us.

Vince says I don't consider them [AEW] a competition in the way I considered WCW back in the day. I'm not sure what their investments are.

Nick says "it's sort of like a horserace where the horse has blinders on" At the same time everything is competition. Sleep is competition.

Salen is took a complex finance question from Ben Swinburne of Morgan Stanley that I'll have to relisten to later as I'm still recovering from Vince mentioning Ted Turner.

Univision investment in Combate is brought up. Do you see mergers of sports? Crossover events to expand fan engagement? Peacock on Sky in Europe. Are you tagging along?

Nick Khan says not sure we see consolidation in MMA space. UFC guys like their market share.

Nick says Vince's original vision is to have one big global territory. "What was called quote-unquote 'wrestling' at the time." We like any new entrant that's well-financed in the combat space.

Nick says, on Peacock international situation, almost all US media conglomerates are looking to go internationally soon. We're optimistic. Let's see what we have in the next couple of months.

Alan Gould from Loop Capital asks Salen to confirm large scale international event (Saudi event).

Salen says it's included in their financial guidance.

Michael Weitz thanks everyone and ends the call.

Thanks for following along!

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Brandon Thurston has written about wrestling business since 2015. He’s also an independent wrestler and trainer. For more, see our About page.


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