Third Quarter 2017 Highlights
* Revenue increased 14% to $186.4 million based primarily on the strong performance of the Company’s media, licensing and live event businesses
* Operating income was $33.9 million.Adjusted and reported OIBDA reached $40.4 million, representing an all-time record quarter on a reported basis1
* WWE Network‘s average paid subscribers (2) increased to 1.52 million over the third quarter 2017, consistent with the Company’s guidance
* Launched WWE Network in China with PPTV (a Suning media company). The service showcases WWE’s major live events, ground-breaking original series, documentaries and classic matches
* Launched localized weekly TV shows in Mexico and Central America. WWE Saturday Night, produced in Spanish with Fox Sports Mexico, will feature highlights of Raw and SmackDown
* Through the first nine months of 2017, digital engagement continued to grow with video views up 23% to 14.2 billion and social media engagements up 5% to 912 million from the prior year
* NBCU secured 20 new advertisers for WWE programs in the 2017-18 upfront, adding 70 over the past 3 years, and reaching a total of nearly 200 advertisers for WWE shows
2017 and 2018 Business Outlook
* The Company is increasing its guidance for 2017 Adjusted OIBDA1 to a range of $108 million to $112 million from its previous target of at least $100 million3
* The Company outlines its expectations for 2018, which include continued WWE Network subscriber growth, record revenue and targeted Adjusted OIBDA1 of at least $115 million3
* WWE’s current license agreements for Raw and SmackDown in the U.S. will expire on September 30, 2019 and in the U.K. and India on December 31, 2019. Management currently expects to announce its plans for U.S. distribution between May September 2018, for the U.K. by year-end 2018, and for India in the first half of 2019
STAMFORD, Conn.–(BUSINESS WIRE)– WWE (NYSE:WWE) today announced financial results for its third quarter ended September 30, 2017. For the quarter, the Company reported Net income of $21.8 million, or $0.28 per diluted share, as compared to Net Income of $11.1 million, or $0.14 per diluted share, in the prior year quarter.4 Operating income increased to $33.9 million from $18.3 million. Adjusted OIBDA1 increased to $40.4 million from $24.5 million.
“We are pleased with our continued success in growing and engaging a large, global audience across multiple platforms. The increased production of original content, our focus on localization and the further development of a diverse talent base contributed to that important achievement, reinforcing the significant scale and power of our brands,” stated Vince McMahon, WWE Chairman and Chief Executive Officer.
George Barrios, WWE Chief Strategy & Financial Officer, added “We achieved a 14% increase in revenue from the monetization of video content and generated results that exceeded the range of our guidance. As we continue to drive WWE’s digital and direct-to-consumer transformation, we have increased our 2017 guidance, which calls for record revenue, record Adjusted OIBDA results, and record subscriber levels.”
Fourth Quarter and Full Year 2017 Business Outlook
For the fourth quarter 2017, the Company projects average paid subscribers to WWE Network of 1.47 million (+/- 2%). The Company also estimates fourth quarter 2017 Adjusted OIBDA of approximately $31 million to $35 million.3, 5 This range represents an expected year-over-year increase from $20.5 million in the fourth quarter 2016 primarily due to the contractual escalation of television rights fees and the continued growth of WWE Network subscribers as well as more favorable year-over-year comparisons in the Company’s fixed cost base. For the full year 2017, the Company projects average paid subscribers to WWE Network of approximately 1.53 million representing year-over-year growth of 8% and record Adjusted OIBDA of $108 million to $112 million.2, 3, 5
In 2018, management expects the Company to achieve another year of record revenue and has targeted Adjusted OIBDA of at least $115 million,3, 5 which would represent another all-time record. As management continues to believe there is a significant long-term growth opportunity for WWE, the 2018 approach balances earnings growth with investment in strategic areas.
Providing perspective on the Company’s targeted results, Mr. Barrios commented, “We remain focused on delivering a wide range of content across platforms that will strengthen our engagement with a broad audience of ardent fans. We believe these efforts will enable us to achieve record results in the coming year and to maximize the value of our long-form content.”
Long-term Growth:Key Content Distribution Agreements
The monetization of WWE content is a fundamental element of the Company’s business model. Certain distribution agreements that represent a significant share of the Company’s television rights revenue will expire in 2019. These agreements include the licensing of its premier programs, Raw and SmackDown, in the U.S., which will expire on September 30, 2019, as well as in the U.K. and India, which will expire on December 31, 2019. Management currently expects to announce its plan for future distribution in the U.S. sometime between May 2018 and September 2018, for future distribution in the U.K. by year-end 2018, and for future distribution in India in the first half of 2019. Future distribution is subject to negotiations, which are expected to begin next year. Although these announcements could occur either before or after these dates, management believes that these ranges represent the most likely periods for such communication.
Comparability of Results
For the three months ended September 30, 2017, there were no material items that impacted the comparability of results on year-over-year basis. For the nine months ended September 30, 2017, Operating income included $5.6 million in expenses primarily related to certain legal matters and other contractual obligations, and $3.2 million in film impairment charges that were characterized as material in previous quarters. As these material items impact the comparability of results on a year-over-year basis, they have been excluded from the Company’s 2017 Adjusted OIBDA. For the comparable periods of 2016, there were no such items.
A reconciliation of 2017 Adjusted OIBDA to Operating income (GAAP) for the three and nine months ended September 30, 2017 can be found in the supplemental schedules on pages 14-17 of this release.
Click here for the full press release from WWE’s Corporate website.