WWE Q4 earnings were a bust but it still had a record-breaking year
World Wrestling Entertainment (WWE) posted Q4 and full-year 2020 results yesterday, and for the sports entertainment giant, it was the best of times and the worst of times. While WWE posted record full-year results, its Q4 earnings report was less than stellar.
In the fourth quarter, WWE posted revenue of $238.2 million vs. $245.2 million, and adjusted earnings of 24 cents vs. 28 cents expected. Operating income came in at $36.2 million vs. $38.8 million, representing a decrease of 64% or $63.6 million versus the prior-year period.
According to WWE, the 26% drop in Q4 revenue was due to the absence of ticketed live events and the cancellation of a large-scale event in Saudi Arabia due to the coronavirus pandemic.
When it came to full-year 2020 numbers, the company pulled in revenue of $974.2 million, represented an increase of 1%. Operating income was $208.6 million, an increase of 79% or $92.1 million, which the company says was driven by the substantial rise in content rights fees. Adjusted OIBDA reached a record $286.2 million, an increase of 59% or $106.2 million.
“As you can see, we generated some pretty strong financial results in a very challenging environment,” said WWE CEO Vince McMahon. He highlighted WWE’s bigger full-year picture and pointed optimistically to what he believes will be a return to some normalcy in 2021.
“Looking ahead to 2021, we expect to continue to manage the challenges of the COVID environment, and it continues. We no doubt will expect a gradual return to ticketed audiences, and that is something that we ensure. Okay, we’re going to have a lot of that, but the live events make any money, get you to get 20% capacity, 30%, 50%, where is that you breakeven. And so that’s to be determined by anyone who’s in the live event business. I don’t think anyone has a handle on exactly when that’s going to happen,” he said.
“Nonetheless, we are ready. We are the most flexible, adaptable media company in the world. We can turn something around as far as a lot of them is six weeks. And it just takes to our ability to innovate as a media company and continue to — in this current environment to create long-term value.”
Digital video continues to be a bright spot for WWE. Digital views increased 10% 38.0 billion. Hours consumed came in at 1.4 billion, rising 10% across its digital and social media platforms.
Evercore ISI analyst John Belton said in a recent note that while WWE is not out of the COVID-19 woods yet, the company should continue to expect earnings recovery in 2022.
“Longer-term, we continue to view WWE as a relatively interesting COVID recovery idea which is still trading >10% lower vs. a year ago and we have confidence that earnings will recover in 2022 as costs normalize with a return to weekly live events. Additionally, we think Peacock represents a strategically important partner for the company which both deepens the relationship with NBCUniversal (and potentially de-risks the Monday Night Raw renewal) while allowing for further experimentation in licensing to a streaming platform.”
Although Belton and Evercore’s 2022 estimates for WWE are modestly lower, they now have better visibility in 2021 and against their Outperform rating backdrop. A $58 price target was reiterated.
Reggie Wade is a writer for Yahoo Finance. Follow him on Twitter at @ReggieWade.
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