WWE announces earnings for Q4

February 20, 2014

The WWE announced its fourth quarter earnings on Thursday and despite not beating loss per share estimates, its stock reached a 52 week high during the day. In addition, Vince McMahon spoke about the CM Punk situation.

As it relates to Punk, when asked about his abrupt departure from the WWE, McMahon indicated that he was on a “sabbatical” and left it at that without further follow up.  Without going further and/or causing a SEC investigation on the matter, McMahon left the door open for future work with Phil Brooks.  Regardless of the rumors of Punk released from the company, McMahon believes that its likely Brooks will return.  Certainly, how professional wrestling is, returning to the ring is always a possibility.

As for the financials, the WWE loss per share was at $0.10 per share.  Analyst estimates had the company’s losses per share for the fourth quarter of 2013 at $0.05 per share.

WWE’s total revenue for Q4 2013 was $118.4 million and it had a net lost $7.9 million.  In comparison, Q4 2012 saw it take in $115.1 million in total revenue which earned a $0.6 million profit.  The much-anticipated WWE Network costs, weak DVD sales (likely due indirectly by the Network) and “compressed television production margins” as stated in the WWE press release were the reasons for the losses this year.

Some other notes:

The company also released information for the full year 2013.  Last year, WWE made a $2.8 million profit with revenues at $508 million.  2012 saw $31.4 million in profits with $484 million in revenue.

PPV revenue increased during the Q4 due to having one more PPV in the quarter.  It earned $15.7 million for the quarter.

The WWE’s consumer products business decreased 31% to $14.1 million due to “declines in the Company’s home entertainment business and toy licensing.”  Although licensing revenues declined, domestic retail toy sales increased in 2013.   It also indicated that “construction toys” have demonstrated strong growth.  We may see more of this with its recent renewed agreement with Mattel.

The WWE’s movie division showed a $5 million revenue increase over 2012 but this was mainly due to timing of the release of the movies in 2012.

WWE stock was up 7.5% to $24.74 at the close of trading on Thursday.

Payout Take:

The overall takeaway from the numbers is that the WWE has spent a lot of money on the WWE Network.  One need only compare the revenues vs. profits in 2012 versus 2013 to know a bulk of the revenues is being reinvested into the Network. The WWE has already projected a $12M to $15M loss for this year’s first quarter due to the costs to launch the Network.  The good news is that most of its key areas are experiencing growth and while there may be some concern with its consumer products division, the recent Mattel deal should help with sluggish sales.  But of course, the big news is the bullish feeling analysts have about the potential rights fees deal the WWE is set to sign.

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