WWE 2022 Q2 Financial Analysis: Revenue Up, New Full-Year Projection In Post-Vince McMahon Era

Although it was inevitable that one day, the wrestling world would no longer have Vince McMahon running WWE, it’s hard to imagine that three months ago, when WWE last held a conference call for its quarterly financial report, that it would be the last call with McMahon in charge.

After a number of allegations of misconduct by McMahon and tens of millions of dollars in money being paid as a result, the man synonymous with WWE (and by extension, professional wrestling) for the better part of 40 years is no longer with the company. Heading the business side of the company are new co-CEOs Nick Khan and Stephanie McMahon, Vince’s daughter. Over the creative side of things, Paul Levesque, better known to wrestling fans as Triple H, is leading the charge.

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While Levesque’s impact on the on-screen presentation and creative aspect is something that will be monitored by pundits and fans on a weekly basis, the August 16 earnings call is the first real look at what the future could hold on the business side since Vince’s retirement from the company back on July 22.

The major impact that the Vince McMahon story has had on the financial side of things is the reported payouts to those allegedly suffering from past alleged misconduct by McMahon for years nearing $20 million as of this writing. That amount has forced the company to re-evaluate past quarterly financial reports over the last few years as a result.

Although that may have led to past financial numbers previously announced by WWE to be somewhat inaccurate, it still doesn’t change the overall viewpoint of the company’s good standing in the next few years.

Though it’s a point brought up ad nauseam by now, WWE’s media rights deals, primarily the ones negotiated with NBCUniversal and FOX, has ensured the company’s finances for several more years. It’s the reason why WWE is routinely setting quarterly and yearly revenue and profit margins.

But the issue concerning Vince’s departure and how it impacts the quarterly finances will not be a question answered with the Q2 earnings report, given that Vince left in July. In fact, it probably won't be fully answered until a much larger sample size of Khan, Stephanie and Levesque running the company can be extrapolated.

The company did note in a filing that it is essentially done with its investigation of McMahon, but added that it may receive future inquiries and subpoenas in relation to the investigation.

“As previously announced, a special committee of independent members of the Board of Directors (the “Special Committee”) was formed to investigate alleged misconduct by the Company’s former Chairman and Chief Executive Officer, Vincent K. McMahon. Mr. McMahon resigned from all positions held with the Company on July 22, 2022 but remains a stockholder with a controlling interest. The Company has received, and may receive in the future, regulatory, investigative and enforcement inquiries, subpoenas or demands arising from, related to, or in connection with these matters. The Special Committee investigation is substantially complete.”

WWE Continues To Post Record Revenue:

As far as net revenue is concerned, WWE already far surpassed what 2021 did through six months. For the second quarter, the company accumulated $328.2 million in net revenue, which is more than $60 million than what the company did in last year’s second quarter ($265.6 million).

In terms of the entire year, WWE made $661.6 million in net revenue, eclipsing last year’s half-year mark of just $529.1 million.

The Adjusted OIBDA in "Media" finished at $90.7 media, slightly better than last year's Q2 OIBDA of $86.2. As for the first six months of the year, WWE has an Adjusted OIBDA under "Media" of $218.9 million, up from last year's $192.8 million.

In terms of Total Adjusted OIBDA, the difference between this year and last year is even more pronounced. For Q2, 2022 has a much higher Total Adjusted OIBDA than last year ($91.5 million to $68.1 million). The same can be said for the first six months ($203.2 million in 2022 and $152 million in 2021).

To go along with the theme of the company's strong business growth and outperforming in the first six months of 2022 represented in these quarterly financial reports, WWE has changed its 2022 Adjusted OIBDA projections from $360 - $375 million to $370 - $385 million. As far as early projections for the third quarter, WWE expects its Adjusted OIBDA to finish in the $70 - $80 million range. Last year's Q3 Total Adjusted OIBDA was $77.9 million.

Frank Riddick, WWE Chief Financial and Administrative Officer, added “In the quarter, we exceeded the high end of our guidance. Adjusted OIBDA increased 34% reflecting 24% revenue growth. Our strong financial performance was primarily driven by our return to a full live event schedule and our consumer products business. These items more than offset an increase in production, content-related, and other expenses. For 2022, we are raising our full year Adjusted OIBDA guidance to a range of $370 to $385 million.”

Live Events Proving To Be A Difference Maker:

The return to live events with ticketed audiences continues to showcase how much of a difference it makes on the company’s financials, look no further as to what WWE has been able to do in these first two quarters compared to last year when it had virtually none such events except for WrestleMania.

The company held 55 events in North America and four international events for the second quarter compared to last year when it only did two (the aforementioned two-night WrestleMania event). In those 55 events in North America, WWE was able to generate $34.9 million in ticket sales with an additional $2.2 million generated from international ticket sales. Last year’s Q2 only did $6.7 in total ticket sales due to the lack of a paying audience for the majority of the quarter.

If one were to combine the total revenue generated from those live events - including advertising and sponsorship - from this year’s Q2 to last year’s Q2, we’re looking at around $31.8 million more in revenue.

Even consumer product sales have grown year-over-year. Between the increase in venue merchandise sales thanks to more events with fans and an even stronger eCommerce performance this year, the company generated $44.1 million in revenue in that category, nearly double that of last year’s Q2, which only did $22.5 million.

With the third quarter well underway, one can start to further examine how WWE performs in terms of live events year-over-year given that the return to regular events with paying fans in attendance started early Q3 last year.

Looking at what WWE did last year in Q3, here is what it will try to surpass in terms of live events and consumer product revenues:

  • $23.8 million in North American ticket sales
  • $2.4 million in international ticket sales
  • $11.6 million in consumer product licensing
  • $8.2 million in eCommerce
  • $5.3 million in venue merchandise

While those numbers are impressive coming back, the company hopes to do even better this year thanks to the wave of momentum the company has been riding throughout the year.

Raw & SmackDown Viewership Remains Steady:

WWE’s viewership in the summer months has remained steady and mostly unchanged, which is actually a net positive given the continued decline of television, especially the stations that airs Raw and SmackDown.

Starting with Raw, the show averaged 1.758 million viewers per episode for the second quarter on the USA Network, which is barely higher than last year’s 1.751 million viewers per episode in the second quarter. Those numbers look even better once one takes a look at USA Network and Top 25 Cable Networks’ viewership for the quarter. USA Network only drew 593,000 viewers in primetime cable programming, down 16 percent from last year’s 704,000 viewers. Among top 25 cable networks, there was an average viewership of 720,000, down five percent from last year’s 761,000 viewers for the second quarter.

As for SmackDown, it too also raised its viewership for the second quarter, even if ever so slightly. On FOX, SmackDown averaged 2.06 million viewers in this year’s second quarter, up from last year’s 2.038 million viewers. As for FOX’s other programming in primetime, the network has seen a ten percent decrease year-over-year in the second quarter from 1.957 million in 2021 to 1.769 million this year.

Although SmackDown does lag behind in overall viewership compared to top four broadcast networks primetime programming, SmackDown did see a little growth compared to the former’s continued decline in viewership. Primetime programming in top four broadcast networks averaged 2.940 million viewers this year in the second quarter, down from last year’s 3.142 million viewers.

Each WWE premium live event (WrestleMania, WrestleMania Backlash and Hell in a Cell) for the quarter was the most viewed event in its history with year-over-year increases of 60 percent, 49 percent and 45 percent, respectively, in domestic unique viewership on the Peacock streaming platform.

WWE Stock Staying Strong:

One of the biggest questions on WWE’s financial stability post-Vince would be how the stock would react, especially in the short-term. To the surprise of some, the stock has not only remained steady, but has seen a slight increase since the morning of July 25, the first time the stock market was open since Vince’s retirement.

Year-over-year, the stock saw a noticeable uptick, growing from from over $49.80 to $73.01 as of 9:30 a.m. ET. Two years ago, the stock was at $44.89.

Whether one has confidence in Khan and Stephanie’s plans for the company on the business side of things remain to be seen. But no one can argue that WWE isn’t in a good spot financially even with Vince gone. The media rights deals WWE negotiated years ago has given the company a safety net and the ability to not make any drastic changes right now.

Stability is a major thing in finances, especially in the stock market. The fact that WWE stock didn’t plummet as some feared can be taken as a great sign moving forward. By no means is it an indication that it will remain in good standing a year from now or even six months from now. But there is good reason to believe that the proverbial ship won’t sink any time soon.

The last time WWE stock performed this strong was back in September 2019 when it was also at more than $73 per share. Of course, it's still not close to back in the fall of 2018 when it did more than $90 per share.

Other News & Notes:

- WrestleMania 39, taking place next year at SoFi Stadium in Los Angeles, has already seen record sales within 24 hours of ticket sales going live. During the earnings call, WWE announced that more than 90,000 tickets have been sold within the first 24 hours -- a 42 percent increase over first-day sales for last year’s WrestleMania event and more than any other event in WWE history. “In nearly 40 years, we have never sold that many WrestleMania tickets that fast,” said Levesque during the earnings call. “With those record numbers, we are tracking toward sell-outs with passionate fans at SoFi Stadium for both nights.”

- WWE’s social media reach by the end of the second quarter return to the all-time high it reached in the third quarter of 2021, reaching 1.225 billion social media followers on Facebook, Twitter and other platforms. WWE reached new all-time highs in its Twitter following, which offset the slightly lower following on Facebook and other social media platforms back in the third quarter of 2021.

- Going back to the topic of consumer products, WWEShop (which constitutes the eCommerce section on its financial report) relaunched in July with Fanatics. During the earnings call, Nick Khan touted how well the trading card sales exceeded expectations as well as its new venture into NFTs. The limted-edition collection tied to the Hell in a Cell premium live event sold out within 24 hours.

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