On Thursday of last week, the WWE reported strong Q1 earnings despite a quarter which saw its stock plummet to an all-time low in April. The earnings beat analysts expectations of the company.
A synopsis of the performance via the Chicago Tribune:
During a conference call with analysts, executives of WWE cited improved revenues from live events and lower losses from its movie business as key drivers for this quarter’s success The good news was due in part that losses from its much maligned film division were only $1 million as compared to $3.6 million a year ago. It is implementing a new direction which it hopes will stop the bleeding of money.
Overall, its operating income increased 21% to $16 million. Some other notable earnings call notes:
– It spent $2.1 million this quarter on its WWE Network which has yet to announce when it will premiere. However, Vince McMahon indicated that the holdup is on the WWE’s side and an announcement is expected sometime within the next 3 months. McMahon expects it to launch this year and maintained that the WWE Network will be run 100% by the WWE.
– Its magazine publishing business was down 36% while its digital business was up 16% due in part to the content on its YouTube channel. Perhaps a sign of the times with print losing out to digital options.
– It noted its increase in social media and leveraging these opportunities. Notably, it has 62 million Facebook fans and 5 million twitter followers. In addition, its YouTube Channel is ramping up in viewership.
– WWE announced that its made ad revenue off of its YouTube channel and that Google (YouTube’s parent company) is now paying the WWE a licensing fee for its content.
– The WWE noted the success of its recent expansion into Russia and China. Its first show in Russia drew rave reviews and could be the harbinger of a new area of growth.
– Live event merchandise revenue increased 13% or $3.2 million due to its tour of Abu Dhabi and fan access events. However, North America ticket revenue decreased by 3% although there were four fewer events during the quarter.
– Internationally revenue was up due to the aforementioned Abu Dhabi tour yet was down in attendance due to tours in Central America. WWE cites the economic climate of Central America as the reason for its decline.
– The PPV business was flat as gains were essentially from PPV price points rather than from an increase in buys. This is interesting considering Vince McMahon’s statement at its annual stockholder meeting in which he said WWE’s have maintained while UFC PPV’s have “dropped like a rock.” The statement is more for impact at the stockholders meeting than it is the truth.
Payout Perspective:
A much brighter perspective in Q1 than last quarter. While the WWE stock saw its worst day in April it has surged forward. It appears that global expansion of the WWE product and its realignment message concerning its film division has painted a brighter picture for the year. Notably, its YouTube channel success seems to be a highlight to monitor as it continues forward. It will be interesting to see if its YouTube channel is a Plan B in case the WWE Network falls through due to lack of distribution. Of course, the WWE has dedicated a significant amount of capital and operating expenditure toward the network so my guess is that the WWE Network will launch.
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