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World Wrestling (WWE) Q2 Earnings Miss, Revenues Surpass
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After witnessing an earnings beat in the first quarter of 2018, World Wrestling Entertainment Inc. posted a negative earnings surprise in the second quarter. However, net revenue surpassed the Zacks Consensus Estimate after missing the same in the preceding quarter. Notably, both the top and bottom lines improved year over year. Clearly, the company’s effort to focus on increasing original content production, localization and strategic initiatives bode well.
This integrated media and entertainment company delivered second-quarter adjusted earnings of 14 cents a share that missed the Zacks Consensus Estimate by a couple of cents but surged considerably from 7 cents reported in the year-ago period.
WWE’s revenues of $281.6 million increased 31.2% and also came ahead of the Zacks Consensus Estimate of $243 million.
Total adjusted OBIDA soared roughly 79% to $43.5 million during the quarter, whereas adjusted OBIDA margin expanded 410 basis points to 15.4%.
After attaining an increase of 59% in adjusted OIBDA of $78.7 million during the first half of 2018, management expects the metric to remain relatively flat year-over-year in the second half. This comprises adjusted OIBDA of $30-$34 million for the third quarter and a robust fourth quarter results. Management envisions significant revenue growth in the final quarter on account of rise in content rights fees and the positive timing of licensing revenue related to the implementation of a new FASB standard (ASC Topic 606).
Based on these, the company now envisions full year adjusted OIBDA in the band of $160-$170 million, up from its prior guidance of at least $150 million.
Management is strengthening and expanding WWE Network through creation of new content along with implementation of programs which will have higher customer attraction and retention power. Further, the introduction of new features, expansion of distribution platforms and foraying into new regions will aid the drive. The company is increasing the monetization of WWE content worldwide. The company completed deals with USA Network and Fox Sports, effective Oct 1, 2019, which raise the average annual value of WWE’s U.S. distribution to 3.6 times that of the previous agreement with NBCU.
World Wrestling Entertainment, Inc. Price, Consensus and EPS Surprise
Media Division: Revenues from the Media division rose 48% to $202.6 million owing to the distribution of certain programming content in international markets. Rise in advertising sales and sponsorship across media platforms (up 49.6%), higher core content rights fees (up 10.1%) comprising license fees from the distribution of flagship programs Raw and SmackDown and sustained growth of WWE Network (up 7.9%) also positively impacted the results.
The number of average paid subscribers increased 10% year over year in the quarter to 1.80 million. Management now envisions average paid subscribers of approximately 1.67 million for the third quarter, reflecting an increase of 10% from the prior-year period. During the first six months of 2018, digital video views surged 58% to 14.4 billion, while hours consumed soared 71% to 509 million across digital and social media platforms.
Live Events: Revenues from Live Events came in at $52.3 million almost flat with the prior-year quarter. The company highlighted that the rise in the average ticket price at events in both North America and international markets was offset by fall in average attendance for the events globally.
A total of 90 events (excluding NXT) took place in the quarter — 61 in North America and 29 in international markets. In the prior-year quarter, there were 92 events, of which 66 were held in North America and 26 in international markets. North American ticket sales fell $2.4 million on account of five less events and an 8% drop in average attendance to 5,900. These were partly offset by 5% rise in the average ticket price to $81.71. International live event revenue jumped 9% to $13.5 million due to three extra events and an 8% rise in average ticket price to $78.31. This was partly offset by a 10% fall in average attendance to about 5,700.
Consumer Product Division: The segment’s revenues came in at $26.7 million, up 9% year over year owing to royalties from the sale of licensed consumer products and merchandise sales timing associated to WWE’s WrestleMania Fan Axxess. Licensing revenues increased due to rise in royalties from the sale of video games, comprising the company’s franchise game, WWE 2K19, and the mobile game, WWE Champions (Scopely).
Other Financial Details
WWE, which carries a Zacks Rank #2 (Buy), ended the quarter with cash and cash equivalents of $154.8 million, long-term debt of $28.3 million and shareholders’ equity of $292.9 million. In the quarter, the company generated free cash flow of $66.4 million.
Sirius XM Holdings (SIRI - Free Report) , a Zacks Rank #2 company, delivered an average positive earnings surprise of 17.5% in the trailing four quarters.
Roku, Inc. (ROKU - Free Report) has a long-term earnings growth rate of 17% and a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
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World Wrestling (WWE) Q2 Earnings Miss, Revenues Surpass
After witnessing an earnings beat in the first quarter of 2018, World Wrestling Entertainment Inc. posted a negative earnings surprise in the second quarter. However, net revenue surpassed the Zacks Consensus Estimate after missing the same in the preceding quarter. Notably, both the top and bottom lines improved year over year. Clearly, the company’s effort to focus on increasing original content production, localization and strategic initiatives bode well.
This integrated media and entertainment company delivered second-quarter adjusted earnings of 14 cents a share that missed the Zacks Consensus Estimate by a couple of cents but surged considerably from 7 cents reported in the year-ago period.
WWE’s revenues of $281.6 million increased 31.2% and also came ahead of the Zacks Consensus Estimate of $243 million.
Total adjusted OBIDA soared roughly 79% to $43.5 million during the quarter, whereas adjusted OBIDA margin expanded 410 basis points to 15.4%.
After attaining an increase of 59% in adjusted OIBDA of $78.7 million during the first half of 2018, management expects the metric to remain relatively flat year-over-year in the second half. This comprises adjusted OIBDA of $30-$34 million for the third quarter and a robust fourth quarter results. Management envisions significant revenue growth in the final quarter on account of rise in content rights fees and the positive timing of licensing revenue related to the implementation of a new FASB standard (ASC Topic 606).
Based on these, the company now envisions full year adjusted OIBDA in the band of $160-$170 million, up from its prior guidance of at least $150 million.
Management is strengthening and expanding WWE Network through creation of new content along with implementation of programs which will have higher customer attraction and retention power. Further, the introduction of new features, expansion of distribution platforms and foraying into new regions will aid the drive. The company is increasing the monetization of WWE content worldwide. The company completed deals with USA Network and Fox Sports, effective Oct 1, 2019, which raise the average annual value of WWE’s U.S. distribution to 3.6 times that of the previous agreement with NBCU.
World Wrestling Entertainment, Inc. Price, Consensus and EPS Surprise
World Wrestling Entertainment, Inc. Price, Consensus and EPS Surprise | World Wrestling Entertainment, Inc. Quote
Segmental Details
Media Division: Revenues from the Media division rose 48% to $202.6 million owing to the distribution of certain programming content in international markets. Rise in advertising sales and sponsorship across media platforms (up 49.6%), higher core content rights fees (up 10.1%) comprising license fees from the distribution of flagship programs Raw and SmackDown and sustained growth of WWE Network (up 7.9%) also positively impacted the results.
The number of average paid subscribers increased 10% year over year in the quarter to 1.80 million. Management now envisions average paid subscribers of approximately 1.67 million for the third quarter, reflecting an increase of 10% from the prior-year period. During the first six months of 2018, digital video views surged 58% to 14.4 billion, while hours consumed soared 71% to 509 million across digital and social media platforms.
Live Events: Revenues from Live Events came in at $52.3 million almost flat with the prior-year quarter. The company highlighted that the rise in the average ticket price at events in both North America and international markets was offset by fall in average attendance for the events globally.
A total of 90 events (excluding NXT) took place in the quarter — 61 in North America and 29 in international markets. In the prior-year quarter, there were 92 events, of which 66 were held in North America and 26 in international markets. North American ticket sales fell $2.4 million on account of five less events and an 8% drop in average attendance to 5,900. These were partly offset by 5% rise in the average ticket price to $81.71. International live event revenue jumped 9% to $13.5 million due to three extra events and an 8% rise in average ticket price to $78.31. This was partly offset by a 10% fall in average attendance to about 5,700.
Consumer Product Division: The segment’s revenues came in at $26.7 million, up 9% year over year owing to royalties from the sale of licensed consumer products and merchandise sales timing associated to WWE’s WrestleMania Fan Axxess. Licensing revenues increased due to rise in royalties from the sale of video games, comprising the company’s franchise game, WWE 2K19, and the mobile game, WWE Champions (Scopely).
Other Financial Details
WWE, which carries a Zacks Rank #2 (Buy), ended the quarter with cash and cash equivalents of $154.8 million, long-term debt of $28.3 million and shareholders’ equity of $292.9 million. In the quarter, the company generated free cash flow of $66.4 million.
Key Picks
AMC Networks (AMCX - Free Report) has a long-term earnings growth rate of 7.2% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Sirius XM Holdings (SIRI - Free Report) , a Zacks Rank #2 company, delivered an average positive earnings surprise of 17.5% in the trailing four quarters.
Roku, Inc. (ROKU - Free Report) has a long-term earnings growth rate of 17% and a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>