WWE revealed the company’s third quarter results for 2019 on Thursday morning.
Q3 Highlights include:
— Revenues declined to $186.3 million from $188.4 million from the prior year quarter. Revenue from the media segment was offset by the decline of sales of live event tickets and merchandise sales.
— Operating income decreased to $6.1 million from $18.1 million in the prior year quarter, decreasing the margin to 3% from 10%.
— Adjusted OIBDA was $25.4 million as compared to $35.8 million in the prior year quarter. This number still exceeded the company’s guidance.
— WWE Network subscriptions averaged 1.51 million paid subscribers, consistent with company projections but down 9%. The company projects the fourth quarter to have 1.43 million subscribers, representing a 10% decline year-over-year.
— In the first nine months of 2019, digital video views increased 12% on a year-over-year basis to 25.6 billion and hours consumed increased 14% to 957 million hours across digital and social platforms.
— Live event ticket sales declined $4.1 million during the quarter due to lower attendance and 19 fewer events being staged.
WWE Chairman and CEO Vince McMahon was quoted in the release as being excited about deepening the engagement of fans around the world:
“During the quarter, we remained focused on expanding the reach of WWE’s brand with the successful debut of Friday Night SmackDown on Fox Broadcast and NXT on USA Network. With our flagship programming now spanning both broadcast and cable throughout the week in the U.S. and our expanding roster of international distribution partners, we remain excited about our ability to deepen the engagement with our fans around the world.”
You can check out the press release below:
WWE® Reports Third Quarter 2019 Results Third Quarter 2019 Highlights
STAMFORD, Conn., October 31, 2019 – WWE (NYSE: WWE) today announced financial results for its third quarter ended September 30, 2019.
“During the quarter, we remained focused on expanding the reach of WWE’s brand with the successful debut of Friday Night SmackDown on Fox Broadcast and NXT on USA Network,” stated Vince McMahon, Chairman and Chief Executive Officer. “With our flagship programming now spanning both broadcast and cable throughout the week in the U.S. and our expanding roster of international distribution partners, we remain excited about our ability to deepen the engagement with our fans around the world.”
George Barrios, Co-President, added “In the quarter, we accelerated strategic investments to support our content creation. Although we have modified our 2019 guidance of Adjusted OIBDA to a range of $180 million to $190 million, performance in this range would still be an all-time record. We continue to believe in WWE’s global growth potential and remain focused on maximizing future opportunities and shareholder value.”
Third-Quarter Consolidated Results
Revenues were $186.3 million as compared to $188.4 million from the prior year quarter as increased revenue in the Media segment, driven by the monetization of core content, was more than offset by decreased sales of live event tickets and merchandise.
Operating Income decreased to $6.4 million from $18.1 million in the prior year quarter, reflecting the decline in revenue and increases in fixed costs, including the impact of certain strategic investments, which were partially offset by a year-over-year reduction in accrued management incentive compensation. The Company’s Operating income margin declined to 3% from 10% in the prior year quarter.
Adjusted OIBDA (which excludes stock compensation) was $25.4 million as compared to $35.8 million in the prior year quarter. The Company’s Adjusted OIBDA margin was 14% as compared to 19% in the prior year quarter.
Net Income declined to $5.8 million, or $0.06 per diluted share, from $33.6 million, or $0.37 per diluted share, in the third quarter of 2018, primarily reflecting a reduction in excess tax benefits related to the Company’s share-based compensation awards at vesting, lower operating performance and the impact of the finance lease related to the Company’s new headquarters.
Effective Tax Rate increased in the current year quarter relative to that in the third quarter of 2018, primarily driven by the recognition of $8.0 million of excess tax benefits related to the Company’s share- based compensation awards at vesting, as compared to $20.7 million in the prior year quarter. The decline in excess tax benefits was driven by the change in the Company’s stock price between the original grant date of the awards and their subsequent vesting date during the third quarter. Excluding discrete items (including the above mentioned excess tax benefits), the Company’s effective tax rate was 27% in the current year quarter as compared to 28% in the prior year quarter.
Cash flows generated by operating activities were $3.2 million as compared to $44.7 million in the prior year quarter driven by unfavorable timing of working capital and lower operating performance.
Free Cash Flow was a $16.4 million use of cash as compared to a $35.5 million source of cash in the third quarter of 2018 primarily driven by the change in operating cash flow and, to a lesser extent, a $10.4 million increase in capital expenditures primarily associated with the Company’s workspace plan.
Cash, cash equivalents and short-term investments were $231 million as of September 30, 2019, and the Company estimates debt capacity under its revolving line of credit of approximately $200 million.