WWE Exceeds Q4 Earnings Estimates, but WWE Network Subs Sink 10%

Bad video game “WWE 2K20” hurt consumer products performance

Last Updated: February 6, 2020 @ 11:43 AM

WWE beat fourth-quarter 2019 earnings estimates but missed on revenue, despite reaching a record high in revenue thanks to its big “SmackDown” on Fox deal.

Wall Street forecast earnings per share (EPS) of 73 cents on $333.28 million in revenue, according to a consensus estimate compiled by Yahoo Finance. On Thursday, WWE actually reported EPS of 78 cents on $322.8 million in revenue for its 2019 Q4 — an 18% increase in revenue over the prior year’s comparable quarter — which is the highest quarterly revenue in the company’s history.

During Q4, WWE Network’s average paid subscribers dropped 10% to 1.42 million. That’s slightly lower than the company’s 1.43 million subscriber projection.

It sounds like major changes could be on the horizon for the WWE streaming service.

Live events revenue was -20% from 2018’s fourth quarter, with fewer events leading to a decline in North American ticket sales. However, there was a slight bump in international sales, primarily due to the increased average ticket price, though fewer events were held abroad as well and there was a decline in attendance.

Consumer products declined as video game “WWE 2K20” was very poorly received, and merchandise sales were down again as well, though not as dramatically as previous quarters.

It’s also worth noting that WWE’s big content distribution deal in the Middle East still hasn’t closed, a venture which would have boosted Q4 revenue results.

“During the fourth quarter, we expanded the reach of WWE’s live programming and further engaged with diverse audiences across platforms and formats,” WWE chairman and CEO Vince McMahon said. “We believe the value of live sports will continue to increase, particularly in today’s evolving media landscape, and we are well positioned to take advantage of this trend to maximize the value of our content.”

Frank Riddick, interim chief financial officer, added: “For the year, we achieved record revenue and Adjusted OIBDA. However, with the delay in completing a Middle East distribution agreement as well as lower business performance than anticipated, our results were at the low-end of guidance. As we work to strengthen engagement in 2020, we are pursuing several strategic initiatives that could increase the monetization of our content, including the distribution of content in the Middle East and India as well as strategic alternatives for our direct-to-consumer service, WWE Network. Excluding the potential impact of these initiatives, we expect significant revenue growth based on the full year impact of our new content distribution agreements in the U.S. and anticipate Adjusted OIBDA of $250 to $300 million. Management believes it has the potential to exceed this range, but is unable to provide additional guidance at this time.”

WWE stock closed Wednesday afternoon at $49 per share, up $1.64. The regular trading day for the U.S. stock markets open at 9:30 a.m. ET.

Looking past Wednesday’s gains, it’s been a rough couple of days for WWE stock. Last Thursday, the company parted ways with co-presidents George Barrios and Michelle Wilson and shareholders in the publicly traded company panicked, with stock plummeting 20% in after-hours trading. At that time, shares were selling for less than $50 apiece — just four days after WWE’s Royal Rumble pay-per-view event.

McMahon and other WWE executives will host a conference call at 11 a.m. ET to discuss the quarter and full year in greater detail. Barrios and Wilson will not be part of the call, but their presence will undoubtedly loom.

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