WWE Beats Q2 Revenue Expectations With Record $410.3 Million

The wrestling promoter missed on earnings, weighed down by transaction costs from its deal with Endeavor’s UFC

(TheWrap/Worldwide Wrestling Entertainment)

WWE reported mixed quarterly results for the second quarter of 2023 Wednesday with net income of $52 million, or 67 cents per share, on revenue of $410.3 million. Analysts surveyed by Zacks Investment Research were expecting earnings of 93 cents per share on revenue of $398.5 million.

Revenue in the sports entertainment company’s media division grew 32% year over year to $320.3 million, including $80.1 million in network revenue, $154.8 million in core content rights fees, $18.9 million in advertising and sponsorship revenue and $66.5 million in “other” media revenue.

The live events segment’s total revenue increased 51% year over year to $62 million. There were 53 total ticketed live events in the current quarter, consisting of 43 events in North America and 10 events in international markets. Average attendance at the company’s North American events was approximately 9,900. WrestleMania 39, which aired in April, broke viewership and sales records for the event, with gate revenue exceeding $21.6 million, sponsorship revenue exceeding $20 million and merchandise sales up by 20% from the previous year.

WWE touted viewership for its flagship programs “SmackDown” and “Raw,” noting that they “increased 26% and 19%, respectively, in the P18-49 demo, significantly outperforming overall broadcast and cable television, which both declined 12%.” Meanwhile, viewership for NXT has climbed 49% year over year in the 18 to 49 demo and 52% year over year in the 18 to 34 demo. It added that WrestleMania, Backlash and Night of Champions set global unique viewership records with year over year increases of 29%, 34% and 45%, respectively.

The consumer product segment’s revenue fell 37% year over year to $28 million, primarily reflecting a decrease in licensing and ecommerce revenue. Licensing revenue came in at $15.6 million, while ecommerce revenue was $4.6 million and venue merchandise revenue was $7.8 million.

Operating income increased 26% year over year to $87.3 million, while adjusted OIBDA grew 54% year over year to $140.7 million.

The latest quarterly results come as WWE has entered into an agreement with Endeavor Group Holdings to form a $21.4 billion entertainment giant.

The deal, which values UFC at $12.1 billion and WWE at $9.3 billion, is expected to close in the second half of 2023. Upon close, Endeavor will hold a 51% controlling interest in the new company, TKO Group Holdings, and existing WWE shareholders will hold a 49% interest.

In June, the applicable waiting period under the Hart-Scott-Rodino Act expired. In addition, the companies obtained all required foreign regulatory approvals during the second quarter.

WWE recorded $18.8 million of expenses for the three-month period ending June 30 related to the strategic alternatives review and agreement with Endeavor. Over six months, the cost related to the deal came to $24.5 million.

WWE also incurred $7.1 million in expenses this year related to costs in connection with or arising from an investigation into alleged sexual misconduct by executive chairman Vince McMahon, revisions to the company’s financial statements and other related matters.

“Mr. McMahon has agreed to review in good faith and reimburse the Company for all reasonable costs” related to the investigation, the company said in a statement. “To date, Mr. McMahon has paid approximately $17.4 million to reimburse the Company for costs that have been incurred and paid by the Company.”

On July 17, federal law enforcement agents executed a search warrant and served a federal grand jury subpoena on McMahon. WWE noted that no charges have been brought.

“We continue to fully cooperate with any investigation outside of that,” WWE CEO Nick Khan told analyst on Wednesday’s earnings call.

McMahon is out on medical leave of absence after having major spinal surgery.

Khan also addressed the historic double strike by SAG-AFTRA and the Writers Guild of America, calling it “unfortunate.”

“WWE continue to support our friends at the WGA and SAG,” Khan added. “We hope for a quick resolution for everybody.”

He noted that WWE was happy to hear that the Alliance of Motion Picture and Television Producers and the WGA are meeting on Friday.

Looking ahead, WWE anticipates 2023 adjusted OIBDA in the range of $395 million to $410 million and third quarter adjusted OIBDA in the range of $75 to $85 million.

It also expects to generate record revenue in 2023, but sees a year-over-year decrease in third-quarter revenue due to “an expected decline in revenue at the Consumer Products segment and a decline in third-party original programming revenue, due to the timing of the production of premium WWE-themed series.” 

Shares of WWE traded lower in pre-market trading on Wednesday.