It has been about a month since the last earnings report for World Wrestling Entertainment . Shares have lost about 5.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is WWE due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
World Wrestling Q1 Earnings Beat, Revenues Fall Y/Y
World Wrestling Entertainment, Inc. posted first-quarter 2023 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. Markedly, total revenues and net income declined year over year.
On the earnings release, management highlighted that WrestleMania was the most viewed WWE premium live event of all time. WWE also announced an expansion of its partnership with Fanatics.
On Apr 3, 2023, WWE announced an agreement to combine WWE and UFC to form a new and publicly listed company. Upon close, Endeavor (parent company of UFC) will hold a 51% controlling interest and existing WWE shareholders will hold a 49% interest in the new company. The deal is expected to be completed in the second half of 2023.
Q1 Performance Insight
This Stamford, CT-based company reported first-quarter 2023 adjusted earnings of 50 cents a share, which beat the Zacks Consensus Estimate and our estimate of 42 cents. The quarterly earnings decreased significantly from 77 cents a share reported in the prior-year quarter.
The company’s revenues of $297.6 million beat the consensus mark of $285 million and our estimate of $285.1 million. However, the metric declined 11% from the year-ago period. This can be attributed to a shift in the timing of the staging of a large-scale international event, which is expected to occur in the second quarter of 2023. This decrease was partially offset by an increase in revenues related to the contractual escalation of media rights fees for the company’s flagship weekly programing.
A Look at Margins
The company’s operating income of $53.1 million declined 43% year over year due to a fall in production costs related to the timing of the company’s premium live events. We note that the operating income margin contracted to 18% from 28% in the year-ago quarter.
Adjusted OIBDA came in at $984.2 million, down 25% year over year. The adjusted OIBDA margin contracted to 28% from 34%.
Management expects second-quarter 2023 adjusted OIBDA between $125 million and $135 million, which represents an increase of approximately 37-48% from the prior-year quarter. The company also expects second-quarter results to reflect an increase in operating expenses, including certain costs to support the creation of content. For 2023, management projects adjusted OIBDA in the range of $395-$410 million for the full year.
Segment Details
Media Division: Revenues in the Media division declined 19% to $225.7 million. The year-over-year decrease was primarily due to a lack of large-scale international event.
Core content rights fees increased to $153.9 million from $139.1 million in the prior-year period. Network revenues came in at $51.4 million, down from $58.7 million reported in the year-ago quarter.
Meanwhile, advertising and sponsorship revenues declined to $15.6 million from $19.8 million in the year-ago period. Other media revenues declined to $4.8 million from $60.5 million in the prior-year period.
Live Events: Revenues from Live Events came in at $32.6 million, up 41% from the year-ago quarter’s figure. The upside can be attributed to a rise in North American ticket sales due to increases in both average attendance and average ticket price.
The company held 50 ticketed live events in the reported quarter consisting of 50 events in North America and no events in international markets. The average attendance at the North American events was roughly 7,850. North American ticket sales increased to $30.2 million from $19.9 million in the year-ago period. The segment’s adjusted OIBDA increased 150% to $7 million in the quarter under review.
Consumer Products Division: The segment’s revenues of $39.3 million increased 22% year over year. We note that consumer product licensing revenues came in at $26.8 million, up from $20 million in the year-ago period.
Meanwhile, e-commerce sales declined to $3.8 million from $7.7 million in the prior-year period. Venue merchandise sales jumped to $8.7 million from $4.5 million in the year-ago quarter.
Other Financial Details
The company ended the quarter with cash and cash equivalents of $197.6 million, net short-term investments of $267.7 million, long-term debt of $20.7 million and stockholders’ equity of $586.7 million. Cash flow generated from operating activities during the quarter amounted to $12.6 million, while free cash flow was $20.6 million.
The company paid out $8.9 million to shareholders in dividends in the first quarter. It did not repurchase any shares during the quarter. As of Mar 31, 2023, the company had approximately $211 million remaining under its share repurchase authorization of $500 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, WWE has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, WWE has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is WWE (WWE) Down 5.5% Since Last Earnings Report?
It has been about a month since the last earnings report for World Wrestling Entertainment . Shares have lost about 5.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is WWE due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
World Wrestling Q1 Earnings Beat, Revenues Fall Y/Y
World Wrestling Entertainment, Inc. posted first-quarter 2023 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. Markedly, total revenues and net income declined year over year.
On the earnings release, management highlighted that WrestleMania was the most viewed WWE premium live event of all time. WWE also announced an expansion of its partnership with Fanatics.
On Apr 3, 2023, WWE announced an agreement to combine WWE and UFC to form a new and publicly listed company. Upon close, Endeavor (parent company of UFC) will hold a 51% controlling interest and existing WWE shareholders will hold a 49% interest in the new company. The deal is expected to be completed in the second half of 2023.
Q1 Performance Insight
This Stamford, CT-based company reported first-quarter 2023 adjusted earnings of 50 cents a share, which beat the Zacks Consensus Estimate and our estimate of 42 cents. The quarterly earnings decreased significantly from 77 cents a share reported in the prior-year quarter.
The company’s revenues of $297.6 million beat the consensus mark of $285 million and our estimate of $285.1 million. However, the metric declined 11% from the year-ago period. This can be attributed to a shift in the timing of the staging of a large-scale international event, which is expected to occur in the second quarter of 2023. This decrease was partially offset by an increase in revenues related to the contractual escalation of media rights fees for the company’s flagship weekly programing.
A Look at Margins
The company’s operating income of $53.1 million declined 43% year over year due to a fall in production costs related to the timing of the company’s premium live events. We note that the operating income margin contracted to 18% from 28% in the year-ago quarter.
Adjusted OIBDA came in at $984.2 million, down 25% year over year. The adjusted OIBDA margin contracted to 28% from 34%.
Management expects second-quarter 2023 adjusted OIBDA between $125 million and $135 million, which represents an increase of approximately 37-48% from the prior-year quarter. The company also expects second-quarter results to reflect an increase in operating expenses, including certain costs to support the creation of content. For 2023, management projects adjusted OIBDA in the range of $395-$410 million for the full year.
Segment Details
Media Division: Revenues in the Media division declined 19% to $225.7 million. The year-over-year decrease was primarily due to a lack of large-scale international event.
Core content rights fees increased to $153.9 million from $139.1 million in the prior-year period. Network revenues came in at $51.4 million, down from $58.7 million reported in the year-ago quarter.
Meanwhile, advertising and sponsorship revenues declined to $15.6 million from $19.8 million in the year-ago period. Other media revenues declined to $4.8 million from $60.5 million in the prior-year period.
Live Events: Revenues from Live Events came in at $32.6 million, up 41% from the year-ago quarter’s figure. The upside can be attributed to a rise in North American ticket sales due to increases in both average attendance and average ticket price.
The company held 50 ticketed live events in the reported quarter consisting of 50 events in North America and no events in international markets. The average attendance at the North American events was roughly 7,850. North American ticket sales increased to $30.2 million from $19.9 million in the year-ago period. The segment’s adjusted OIBDA increased 150% to $7 million in the quarter under review.
Consumer Products Division: The segment’s revenues of $39.3 million increased 22% year over year. We note that consumer product licensing revenues came in at $26.8 million, up from $20 million in the year-ago period.
Meanwhile, e-commerce sales declined to $3.8 million from $7.7 million in the prior-year period. Venue merchandise sales jumped to $8.7 million from $4.5 million in the year-ago quarter.
Other Financial Details
The company ended the quarter with cash and cash equivalents of $197.6 million, net short-term investments of $267.7 million, long-term debt of $20.7 million and stockholders’ equity of $586.7 million. Cash flow generated from operating activities during the quarter amounted to $12.6 million, while free cash flow was $20.6 million.
The company paid out $8.9 million to shareholders in dividends in the first quarter. It did not repurchase any shares during the quarter. As of Mar 31, 2023, the company had approximately $211 million remaining under its share repurchase authorization of $500 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, WWE has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, WWE has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.