WWE Reports Record Revenue And Q2 2016 Results, Vince McMahon Comments
WWE issued the following today:
WWE® Reports Record Revenue and Q2 2016 Results
Second Quarter 2016 Highlights
* Revenue increased 32% (13% excluding the timing impact of WrestleMania1) to a record $199.0 million as WWE's Live Event and Network segments achieved their highest quarterly revenue in Company history
* OIBDA2 of $7.5 million was in line with the Company's guidance
* WWE Network reached a record of 1.52 million average paid subscribers over the second quarter 2016, which represented a 25% increase from the second quarter 2015
* SmackDown transitioned to a live format on USA Network. Since July 25, WWE's flagship programs, Monday Night Raw and SmackDown, have and will continue to feature unique talent and storylines
* Through the first six months of the year, digital engagement metrics continued to grow with video views up over 100% to nearly 8 billion and social media engagements up 39% to 570 million versus the prior year
* The Company announced a multi-year content distribution deal in China with PPTV, the return of a WWE live event to Shanghai in September and the signing of the first-ever Chinese talentSelect WrestleMania Highlights
WrestleMania (April 3, 2016) achieved record breaking attendance, ticket sales, viewership, and social media activity. WrestleMania broke WWE's attendance record, attracting 101,763 fans at AT&T Stadium. WWE Network reached a record 1.82 million total subscribers following WrestleMania (April 4). During WrestleMania Week, WWE Network featured 19 hours of prime-time, premier programming and subscribers watched nearly 22 million hours of content, averaging 12 hours per subscriber. WrestleMania generated more than 2.5 million mentions on Twitter in one day and over 250 million video views across WWE digital and social platforms during WrestleMania Week.
STAMFORD, Conn.–(BUSINESS WIRE)– WWE (NYSE:WWE) today announced financial results for its second quarter 2016. For the quarter, the Company reported Net income of $0.8 million, or $0.01 per share, as compared to Net income of $5.1 million, or $0.07 per share, in the prior year quarter.
"I continue to be pleased with the execution of our strategy to optimize the long-term value of our content," stated Vince McMahon, WWE Chairman and Chief Executive Officer. "Progress on this objective is evidenced by the continued year-over-year growth of WWE Network, the transition of SmackDown to a live format every week and the completion of our first exclusive content agreement in China."
George Barrios, WWE Chief Strategy & Financial Officer, added "We achieved a 25% increase in average paid subscribers to WWE Network and generated earnings that were in line with our guidance. Over the past 12 months we delivered record revenue of $703 million. Additionally, for the first half of 2016, we delivered revenue growth of 13% from the prior year period and our digital video views increased by more than 100% to nearly 8 billion and our social media engagements increased 39% to 570 million."
Q3 2016 Business Outlook
For the third quarter 2016, the Company projects average paid subscribers to WWE Network of 1.49 million (+/- 2%), representing a year-over-year increase of approximately 27%. The third quarter subscriber forecast represents a sequential decline of 2% from the second quarter 2016, which compares to the 4% decline from the second to the third quarter 2015.
The Company also estimates third quarter 2016 Adjusted OIBDA3 of approximately $24 million to $28 million. This range represents an expected year-over-year increase from $23.4 million in the third quarter 2015 primarily due to the increased monetization of the Company's video content and the continued strong performance of its Live Events business.
2016 Perspective
WWE management has previously indicated that if the average paid subscribers to WWE Network increases at a rate between 20% and 25% in 2016, 2016 Adjusted OIBDA could be in a range of approximately $70 million to $85 million. If recent overarching trends regarding the acquisition and retention of subscribers continue over the remainder of 2016, management continues to believe average paid subscriber growth would be at the upper end of its range and 2016 Adjusted OIBDA would be between $80 million and $85 million. The range of 2016 Adjusted OIBDA includes the previously communicated incremental investment of $15 million to $20 million in content, technology and emerging markets. As recent historical data may not offer a comparable basis for projecting future results and future results may differ from the range provided, management offers these ranges of 2016 subscriber growth and financial performance to provide further perspective rather than as guidance.
Comparability of Results
WrestleMania 32 occurred on April 3, 2016 and is reflected in second quarter 2016 results, whereas the comparable prior year event occurred on March 29, 2015 and was included as part of first quarter 2015 results. Despite the shift in timing, WrestleMania had a significant impact on subscriber growth in the second quarter of both years. Therefore, the timing impact of the event on second quarter 2016 results is best estimated by measuring the direct contribution the event generated from ticket, merchandise and pay-per-view sales and production costs (excluding any attribution from WWE Network subscriptions). In aggregate, these items increased second quarter 2016 revenue by $29.4 million and reduced OIBDA by $0.2 million with no net impact on EPS. Refer to the Supplemental Information – Pro Forma Income Statement & Reconciliation to GAAP Measures in this release for a pro-forma analysis excluding WrestleMania from second quarter 2016 results.
Three Months Ended June 30, 2016 – Results Overview
Revenues increased 32% to a quarterly record high $199.0 million, with the increase driven, at least in part, by the timing impact of WrestleMania. (On a pro-forma basis, excluding this timing impact, the Company's overall revenues increased 13% from the prior year quarter.) North American revenues increased 39% from the prior year quarter primarily due to the impact of WrestleMania ticket and merchandise sales as well as by the growth of WWE Network subscribers and the escalation of television rights fees. The quarter also reflected higher ticket sales and prices at other North American events and increased digital advertising revenue, which were partially offset by lower video game revenue due to the timing of a lower effective royalty rate (discussed below). Revenues from outside North America increased 15% driven by the increased monetization of content, as reflected in the Media Division, and by higher Live Event revenue from the EMEA region.
Read the full announcement on WWE's Corporate website at this link.