Today, WWE issued its first quarter of 2023 revenue report to the media. The company generated $297.6 million in revenue for the first quarter which was a decrease of 11% in the same quarter of 2022. The net income was $36.7 million, a decrease from $66.1 million in the first quarter of 2022.
WWE CEO Nick Khan issued the following statement.
“We are off to a strong start in 2023. Operationally, we continue to effectively execute our strategy, including staging the most successful WrestleMania of all time in early April. WrestleMania, as well as our other successful premium live events such as Royal Rumble and Elimination Chamber, and strong viewership for our weekly flagship programs, Raw and SmackDown, further expanded the reach of our brands and enhanced the value of our content. Strategically, we entered into a historic agreement with Endeavor to create a one-of-a-kind company. With WWE and UFC we intend to form a global sports and entertainment business that has the potential to unlock vast growth opportunities for both businesses. We believe that bringing these two iconic and highly complementary brands together will allow us to increasingly capitalize on the rapidly expanding, global appetite for live sports events and premium entertainment content, with the goal being to maximize value for our shareholders.”
Here’s the full report.
First-Quarter Consolidated Results
Revenue decreased 11%, or $35.8 million, to $297.6 million, primarily due to a shift in the timing of the staging of a large-scale international event, which occurred in the first quarter of 2022 but is expected to occur in the second quarter of 2023. This decrease was partially offset by an increase in revenue related to the contractual escalation of media rights fees for the Company’s flagship weekly programming, Raw and SmackDown, and higher North American ticket sales.
Operating Income decreased 43%, or $39.3 million, to $53.1 million, reflecting the decrease in revenue and relatively flat operating expenses. Operating expenses primarily reflected a decrease in production costs related to the timing of the Company’s premium live events essentially offset by the impact of certain costs related to the Company’s strategic alternatives review and recently announced agreement with Endeavor. (See the “WWE and Endeavor Transaction” discussion for further details.) The Company’s operating income margin decreased to 18% from 28%.
Adjusted OIBDA decreased 25%, or $27.5 million, to $84.2 million. The Company’s Adjusted OIBDA margin decreased to 28% from 34%.
Net Income was $36.7 million, or $0.43 per diluted share, a decrease from $66.1 million, or $0.77 per diluted share, primarily reflecting the decrease in operating performance and an increase in the Company’s effective tax rate.
Cash flows generated by operating activities were $12.6 million, a decrease from $93.8 million, primarily due to lower net income and higher working capital requirements.
Free Cash Flow3 was an outflow of $20.6 million, a decrease of $90.3 million from an inflow of $69.7 million, primarily due to the decline in cash flows generated by operating activities and higher capital expenditures. For the three months ended March 31, 2023, the Company incurred $29.6 million of capital expenditures related to its new headquarter facility. Excluding the capital expenditures related to the new headquarter facility, Free Cash Flow for the three months ended March 31, 2023 was $9.0 million.
Cash, cash equivalents and short-term investments were $465.3 million as of March 31, 2023. The Company currently estimates debt capacity under its revolving line of credit of $200 million.
WWE and Endeavor Transaction Highlights
- As previously disclosed, on April 3, 2023, WWEand Endeavor announced an agreement to combine WWE and UFC to form a new, publicly listed company. Upon close, Endeavor will hold a 51% controlling interest and existing WWE shareholders will hold a 49% interest in the new company
- The transaction values UFC at an enterprise value of $12.1 billion and WWE at an enterprise value of $9.3 billion. The transaction represents a contribution price of WWE of approximately $106 per share (before any post-closing dividend)
- Following the closing, the new public company, in which WWE shareholders will initially hold 100% of the economic interest, is expected to issue a post-closing dividend consisting of excess cash at WWE
- The transaction is expected to close in the second half of 2023. The transaction is subject to the satisfaction of customary closing conditions, including receipt of required regulatory approvals
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