WWE today announced financial results for its first quarter ended March 31, 2021.
Revenue for Q1 was $263.5 million, a decrease of 9% or $27.5 million. It was noted that this reflects the absence of WWE’s ticketed live events and a large-scale international event. The decline in revenue was partially offset by certain WWE Network intellectual property rights, like the Peacock deal.
“During the first quarter, we continued to effectively execute our strategy, demonstrating our ability to adapt to a challenging live event environment and to expand the reach and monetization of our content in a changing media landscape,” said Vince McMahon, WWE Chairman & CEO. “The launch of WWE Network on NBCU’s streaming service, Peacock, the multi-year extension to distribute NXT on USA Network and the successful staging of WrestleMania illustrate the enduring and increasing value of the WWE brand as the foundation for long-term growth.”
Kristina Salen, WWE Chief Financial Officer, added “In the quarter, Adjusted OIBDA results were driven by the recognition of revenue from our Peacock agreement. Although Adjusted OIBDA increased in the quarter, we are not adjusting our previous full year Adjusted OIBDA guidance of $270 million to $305 million at this time, given the uncertainty regarding the timing and pace of return for ticketed audiences and our ability to stage international large-scale events due to COVID-19 restrictions.”
Revenue was $263.5 million, a decrease of 9% or $27.5 million, primarily due to the cancellation of the Company’s live events, including a large-scale international event, and the associated loss of merchandise sales, all due to COVID-19. These declines were partially offset by an increase in network revenue, which was primarily driven by the upfront revenue recognition related to the delivery of certain WWE Network intellectual property rights, and, to a lesser extent, the contractual escalation of domestic core content rights fees.
Operating Income was $65.1 million, an increase of 22% or $11.8 million, as upfront revenue recognition related to the delivery of certain WWE Network intellectual property rights and, to a lesser extent, the contractual escalation of domestic core content rights fees as well as a decrease in stock compensation expense were partially offset by the absence of a large-scale international event. The change in stock compensation expense increased the growth rate in Operating Income as compared to the growth rate in Adjusted OIBDA. The Company’s Operating income margin increased to 24.7% from 18.3%.
Adjusted OIBDA (which excludes stock compensation) was $83.9 million, an increase of 9% or $6.6 million, as the upfront revenue recognition related to the delivery of certain WWE Network intellectual property rights and, to a lesser extent, the contractual escalation of domestic core content rights fees, were partially offset by the absence of a large-scale international event. The Company’s Adjusted OIBDA margin increased to 31.8% from 26.6%.
Net Income was $43.8 million, or $0.51 per diluted share, an increase from $26.2 million, or $0.31 per diluted share, in the first quarter 2020, primarily reflecting improved operating performance and, to a lesser extent, the absence of impairment charges related to certain equity investments.
Cash flows generated by operating activities were $59.9 million, a decrease from $65.9 million, as improved operating performance was more than offset by the timing of collections associated with Network revenue.
Free Cash Flow was $53.8 million, a decrease from $57.6 million, primarily due to the change in operating cash flow, partially offset by a reduction in capital expenditures.4
Cash, cash equivalents and short-term investments were $461 million as of March 31, 2021, which reflects the repayment of the remaining $100 million borrowed under the Company’s revolving line of credit during the second quarter 2020. As a result, the Company estimates debt capacity under its currently undrawn revolving line of credit of $200 million.