WWE has released its financial report for Q2 2020 in a press release touting the company's performance as strong despite declining ratings amidst the COVID-19 pandemic. By cutting costs and relying on their lucrative television contracts, WWE remains profitable despite a complete lack of live events due to coronavirus. The company reported $43.8 million in net income, four times what they reported for Q2 in 2019.
"Our second-quarter financial performance was strong and demonstrated our ability to respond to the challenges posed by COVID-19, pal," said Vince McMahon in a press release. "We continue to adapt our business to the changing environment, focusing on the development of new content for global distribution platforms and increasing audience engagement to drive growth and value for our shareholders."
WWE interim CFO Frank Riddick added, "In the quarter, we delivered revenue of $223 million and Adjusted OIBDA of $73.5 million as we continued to offset the impact of cancelled events by reducing costs. Our cash flow remains strong, and we believe we have the capital resources to deliver on our strategic initiatives and growth opportunities."
In a conference call discussing the news, McMahon was asked why NXT and AEW seem to be faring comparatively better during the pandemic than Raw on Smackdown. McMahon avoided the obvious answer — that those shows are far less boring than Raw and Smackdown — and instead attributed their success to being "new." McMahon placed a heavy emphasis on the fact that audiences will need to return in order for Raw and Smackdown to recover, which is the new strategy to deny decades of creative stagnation, apparently.
Though WWE has continued to keep a lid on the COVID-19 outbreak that ravaged the company in June and July, refusing to release the names of people who tested positive and lying about it on television, the financial report did contain a section on the virus.
COVID-19 Actions and Business Outlook
- Due to COVID-19 and related government-mandated impacts on WWE, the Company continued its various short-term cost reductions and cash flow improvement actions. (See first quarter 2020 earnings release). These actions contributed to WWE's enhanced liquidity, which reached $548 million in cash and short-term investments as of June 30, 2020
- The Company is continuing to adapt its business to the changing environment with a focus on enhancing the production of content and furthering fan engagement
- Management may resume its opportunistic acquisition of stock under the Company's $500 million share repurchase program, subject to WWE's business outlook and liquidity as well as whether share repurchases compare favorably to other capital allocation alternatives
- Management continues to believe the Company's growth prospects remain strong and that WWE is well positioned to take full advantage of the changing media landscape and increasing value of live sports rights over the longer term (See COVID-19 Actions and Business Outlook on page 7)
Here are the highlights from the press release:
- Second Quarter 2020 Highlights
- Revenues were $223.4 million as compared to $268.9 million in the prior year quarter reflecting the timing of the Company's large-scale event in Saudi Arabia; Revenues reached a record $514.4 million year-to-date, representing 14% growth from the prior year period
- Operating income was $55.7 million as compared to $17.1 million in the prior year quarter
- Adj. OIBDA1 increased to $73.5 million from $34.6 million in the prior year quarter
- Free Version of WWE Network was announced on June 1, unlocking a portion of WWE's content library to expand reach and engagement of its direct-to-consumer streaming service for all fans
- WWE Network average paid subscribers2 declined 1.5% to 1.66 million while ending paid subscribers increased 6% to 1.69 million
- Digital video views increased 10% to a record 9.9 billion and hours consumed increased 15% to a record 374 million across digital and social media platforms3
- eCommerce revenues nearly doubled to $12.6 million, substantially offsetting the loss of venue merchandise sales with 76 fewer events in the quarter