WWE Q4 2021 earnings report and conference call with executives

WWE reports $1.095 billion in revenue for full year 2021, its highest ever.

Net income for the year is $180.4, also a new annual record for profitability, as expected, and blowing away analysts expectations.

https://corporate.wwe.com/investors/news/press-releases/2022/02-03-2022-210628884

How 2021 compares to every year WWE has ever publicly reported on.

Revenue: WWE reaches $1 billion for the first time ever.

Net income: The most final measure of profitability.

2021 is easily WWE's most profitable year ever. Even when adjusting for inflation, 2021 was nearly twice as profitable as the best "Attitude Era" years of 1999 and 2000.

Q4 2021 was the first full quarter with live event touring since Q4 2019.

The live events division managed to record $1.4 million in operating income, far better than I was expecting.

WWE's KPI slide on live events reports average paid North American attendance of 5200 across 48 events. Internationally, WWE averaged 3700 for 9 events (doesn't include their Saudi event in the quarter).

WWE states guidance for 2022, saying they'll set new annual records again for revenue and non-GAAP profit metrics adjusted OIBDA.

WWE expects adjusted OIBDA to be in the range of $360M to $375M. For comparison, they reported $327M for that metric this year.

Earnings per share (EPS) ratio (net income / diluted shares) for Q4 was $0.76, exceeding even the highest stock analysts' estimate.

I was higher than any analyst and closer to actual results, but Q4 EPS even exceeded my expectations. I was closer on revenue than the consensus.

Very little after hours movement on the stock so far.

Conference call coming up at the top of the hour may or may not inspire that to change.

WWE's KPI slide on AVOD (ad-supported video on-demand) consumption shows Q4 way down. WWE tries to excuse it pointing out no PLE (nee PPV) in December and "the removal of full matches on YouTube and Facebook".

WWE's updated slides on Raw and Smackdown ratings, showing its programs losing viewers but Raw maintaining year-over-year better than broader comparisons.

A rare quarter where social media followers are down from the prior quarter. Possibly due to talent cuts, since they're adding up followers from all talent and brand accounts to get to this number.

Media (think video) is by far WWE's biggest driver of revenue, reporting $936.2M for 2021, 85% of all revenue. That's exacerbated by the lack of live events in the first half of the year, but media revenues for WWE will only continue to grow as rights fees contractually increase.

It helps, though, that events in service for the government of Saudi Arabia (twice a year for ~$50 million each) are included in the "Other" line in the media division. That line reported $52.1M for Q4 with the quarter including the first Saudi event since Feb 2020.

Guess which quarters include a "large-scale international event":

Conference call is beginning now.

Comments are expected from Vince, Nick Khan, Stephanie and new permanent CFO Frank Riddick.

New IR SVP Seth Zaslow opens the call, makes introductions of the key executives, and read forward-looking statements.

"Welcome, everyone!" Vince says.

I will now do my best to quote and paraphrase WWE executives. This may not be direct quotes.

Vince gives a generic opening statement.

"Our performance speaks for itself…. So Nick take'er away."

WWE president Nick Khan says Jul 2021 MITB was up on Peacock 25% higher than in 2019.

Summerslam was up "over 30%" in 2019.

Extreme Rules was up 20% in 2019.

"international event" up 75%.

Survivor Series up "almost 25%" than in 2019.

Nick says over 3.5 million fully paid Peacock subs have watched WWE content.

"More people are watching PLE than ever before."

WWE has a dozen scripted and unscripted projects sold on our IP. Look for announcements soon.

Look for a launch date on NFT marketplace soon.

Look for WWE branded lottery tickets rolling out in a number of states this year.

Mattel partnership goes back over a decade results in action figures on shelves in 50+ global markets.

"Day 1" PPV date selected with the idea it would attract holiday travelers. It was one of the highest 60% greater than any December PLE in WWE history.

Royal Rumble more than "44,000 in attendance". 2nd largest gate in Rumble history. 45% higher viewership on Peacock vs. 2020.

Bad Bunny, Ronda Rousey returned. Johnny Knoxville involved. Pop culture sensations look to partner with WWE.

Upcoming Jeddah event clear of college football. "Large-scale international event" is uttered, charging me a the first $20 contribution to @pressfreedom.

Rey Mysterio will be cover superstar for WWE 2K22. Steph will talk about gaming in a moment.

Our POV on consolidation in gaming section. MSFT acquisition of Activision. TakeTwo acquired Zinga. Sony bought Bungie. Sector should end up with 4-5 player emerging, depending on IP.

We believe consolidation trend will continue in 2022. Eyes on DirecTV, Dish, Nextstar.

Sports rights space talk. Streamers are spending on live sports. EPL-NBCU deal was largely a Peacock play. ViacomCBS shifting UEFA programming to Paramount+ and picking up Serie A.

Just a matter of time for Apple and Netflix to make moves, Nick says.

In sum with WWE focused on IP value and a market hungry for brands, we couldn't' be more optimistic to drive growth in 2022 and beyond.

Now Steph's comments.

Sasha Banks starred in the cold open for CFP championship game. In Nov, Drew appeared in MTV VMAs. Big E starred in cold open for Fury-Wilder on ESPN+ and Fox Sports PPV.

Paramount Studios partnered with WWE to promoted Jackass Forever. Knoxville talked beating up Zayn on Kimmel

Ronda won Rumble match. Rumble 2022 saw 45% increase in viewership versus 2020 and was the most socially engaging program across all platforms.

WWE launched DoorDash sponsorship, co-presenting with 2K for Rumble. We aired 2K22 trailer which will launch on Mar 11.

WWE is 2K's highest grossing mobile game. 88% of our audience identify as gamers.

We're optimistic as NFLX and YouTube launch their own gaming initiatives.

The next generation of fans and superstars is a huge priority for WWE. We launched NIL, allowing athlete sponsorship.

Many NIL signees have strong social followings. "Think of all the collegiate athletes who won't make it to the NBA, WNBA, NFL, Olympics." Gable Steveson is highlighted.

WWE YouTube channel has 83 million subs. We remain the #1 sports brand on TikTok. Across all social platforms we had 50 billion total views, earning "10s of millions of additional revenue".

Pizza Hut was brought to the ring by the Street Profits during Survivor Series. Fans chanted "We want pizza" showing how successful these integrations can be.

Steph highlights Red Notice starring The Rock integration.

She hands it over to CFO Frank Riddick.

Riddick talks over these slides. He mentions "large-scale international event" twice (we're up to 3 mentions of this euphemism for Saudi event).

MLW's lawsuit against WWE is mentioned in the latter's 10-K, which was just published.

The MLW suit has not been mentioned on the call, to be clear.

Riddick discusses WWE's profit guidance, driven by growth in media, live events being back for a full year, large-scale international events ($) and decreased production costs thanks to no Thunder Dome.

WWE's new HQ move will contribute $235M – $255M in capex in 2022. Riddick highlights the benefits.

Riddick finishes comments and Q&A with stock analysts begins.

Curry Baker w/ Guggenheim asks about ads & sponsors monetization outlook.

Steph says there's no reason why they shouldn't be in the hundreds of millions in the future. ($71.5M was reported for 2021)

Eric Handler w/ MKM asks about Disney+ Hotstar deal. Disney, Discovery covering multiple countries. Why start with 1 country deal, not blanket deal?

Nick says look for more region by region deals. We thought Disney was particularly strong in Indonesia.

Ben Swinburne w/ Morgan Stanley asks about metaverse, markets physical and digital.

Steph says absolutely, WWE is a community based business. There's huge opportunities to expand upon that.

($60 in donations to CPJ in this exchange alone due to "metaverse" utterances)

Steven Cahall w/ Wells Fargo (one of few analysts who have WWE as a sell) asks what's driving increases in media revenues.

Riddick mentions new content they're creating that hasn't been announced yet.

Nick adds "why just limit it to 2?" regarding Saudi events. "We'll see what happens in the next months.

David Karnovsky w/ JP Morgan asks about NIL program.

Steph and Nick respond, largely reiterating Steph's earlier comments about opportunities for college athletes. Nick mentions Reigns specifically as an example.

Brandon Ross of LightShed asks about next-day rights.

Nick says they feel as good about those rights right now as he did about their live rights deal in 2018 and Peacock deal more recently.

Nick asks Brandon Ross if he'll be going to Wrestlemania this year. Nick jokes that they'll have a special piledriver ready for Brandon.

I missed many comments and some questions throughout here. I encourage everyone interested to listen back on http://corporate.wwe.com

The call has ended.

$WWE shares are up about 2% in after market trading after the call, just over the day's open price.

I will have to check the transcript but the count of utterances of "metaverse" and "large-scale international event" were numerous and I believe I owe CPJ over $100, iaw my earlier pledge.

Some notes now from their annual report (10-K)…

WWE updated the number of talent count:

WWE reports its full-time employee head count at approximately 870 as of February 2022. Unsurprisingly, that's down from last year. There cuts not only to talent (evident in previous tweet) but many employees were laid off and depts consolidated.

10-K:

https://otp.tools.investis.com/clients/us/wwe/SEC/sec-show.aspx?FilingId=15529495&Cik=0001091907&Type=PDF&hasPdf=1

An increasing portion of WWE's revenue is coming from North America, driven by contractually escalating media rights fees in the U.S.

That reverses the increase by percentage in 2018 in EMEA, driven by new payments from the Saudi Arabian government.

WWE doesn't name the customer but discloses amount of revenue from any customer contributing >=10% of WWE's annual revenue.

I believe customers referred to here match w/ amounts as follows.

2021
$412M: NBCU
$200M: Fox

2020
$270M: NBCU
$183M: Fox

2019
$207M: NBCU
$110M: KSA

A short excerpt from Frank Riddick's restricted stock award and non-compete agreement, attached to the 10-K.

Possible other executives have agreed to similar language.

He basically can't go work for another pro wrestling company for 12 months after his employment with WWE ends.

Q4 2021's average North America ticket (by my calculation, since some Q4 data isn't explicitly reported) of $63, gives more clarity on what the average ticket price for WWE events is going forward.

Up until now I've been assuming ~$55, slightly higher than Q1 2020, too low.

Seeking Alpha has the conference call transcript up now here:

https://seekingalpha.com/article/4484230-world-wrestling-entertainment-inc-wwe-ceo-vincent-mcmahon-on-q4-2021-results-earnings-call?mailingid=26593247&messageid=2800&serial=26593247.547&utm_campaign=rta-stock-article&utm_medium=email&utm_source=seeking_alpha&utm_term=26593247.547

Fascinating seeing online sales of merchandise offset the losses in during the touring pause, then those sales relax when touring when back on the road.

I think of venue merch sales as spontaneous impulse buys and not something that would be deliberately replaced by consumers.

Venue merch sales per capita seems to have settled at about $12, higher than the $9 from Q4 2019. Like with ticket price, it's increased from where they left off pre-Covid, probably more than inflation.

Jason Ounpraseuth has covered pro wrestling since 2019. He co-hosts the Gentlemen’s Wrestling Podcast.

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


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