WWE Q3 – Full Break Down of Revenue & Profit, plus Top 10 Revenue Drivers

WWE Third Quarter 2015 Revenue & Profit Break Down

– Total quarterly revenue: $166.2 million (vs. $120.2 million in Q3-2014).

The cost of revenue was $98.270 million, up from $78.417 million. However, WWE’s direct profit margin was better at $67.93 million vs. $41.76 million in Q3-2014.

– Total segment profit: $23.4 million (vs. $2.7 million in Q3-2014).

– Operating Income: $17.9 million (vs. $5.0 million loss in Q3-2014).

(1) Media Division

Total Revenue: $114.9 million, up 49 percent from $76.9 million in Q3-2014.

Total Profit: $48.8 million, up 86 percent from $26.3 million in Q3-2014.

– TV Rights revenue was $65.2 million, up 55 percent from $42.2 million in Q3-2014.

Profit was $26.6 million, up 29 percent from $20.7 million in Q3-2014.

The big leap in TV Revenue offset increased production costs. WWE disclosed in their 10-Q filing with the SEC that WWE “spent $26.6 million to produce additional content for television, including Total Divas Season 4 and Tough Enough, and various programs for the WWE Network, compared to $14.8 million in the prior year period.”

Going forward to the fourth quarter, WWE said they anticipate spending “approximately $5.0-15.0 million to produce additional content during the remainder of the current year.”

– WWE Network revenue was $40.9 million, up from $26.1 million in Q3-2014 during the Network ramp-up period.

Within the segment is $4.5 million from PPVs, up from $3.7 million in Q3-2014. (Yes, this year’s third quarter PPV segment outdrew last year’s.)

However, WWE received less revenue per buy – $12.65 per buy in Q3-2015 vs. $12.83 per buy in Q3-2014, indicating more international buys in the mix.

Network profit was $17.7 million, up 670 percent from $2.3 million in Q3-2014.

Financial executive George Barrios said during Thursday’s conference call that the dramatic shift was due to (a) the comparability to last year during the Network ramp-up period and (b) the current year operations, where WWE achieved “operating efficiencies,” including streamlining their customer service.

WWE has also rolled in PPV broadcast-related expenses that were greater last year than this year after going through the Network transition.

– Home Entertainment revenue was $3.0 million, down 17 percent from $3.6 million in Q3-2014. WWE said the decline was “primarily due to lower shipments and sell-through of DVD/Blu-ray titles attributable, in part, to a broader decline in the home entertainment industry.”

WWE disclosed that 368,000 units were shipped in the quarter, down 14 percent from 429,000 in Q3-2014.

Profit was $1.3 million, unchanged from Q3-2014.

– Digital Media revenue was $5.8 million, up from $5.0 million in Q3-2014 mainly due to “higher advertising revenue.” This segment grew to the #6 revenue-driver in the quarter, up from #8 in Q3-2014.

Profit was $3.2 million, up 60 percent from $2.0 million in Q3-2014.

(2) Live Events Division

Total Revenue: $26.1 million, up 20 percent from $21.8 million in Q3-2014.

Total Profit: $6.4 million, up 64 percent from $3.9 million in Q3-2014.

– North American live event revenue was $21.1 million, up 22 percent from $17.3 million in the prior year quarter. This was mainly due to a 10 percent increase in the average ticket price to $48.98 compared to $44.60 in Q3-2014. Average attendance of 5,100 was essentially unchanged.

– International live event revenue was $4.5 million, up slightly from $4.3 million in Q3-2014. Attendance increased to an average of 8,900, mainly due to tours in Asia, up from 7,700 for int’l events in Q3-2014.

This slightly made up for a dip in average ticket price of $84.73 compared to $92.89 in Q3-2014. Both quarters included six international events.

(3) Consumer Products Division

Total Revenue: $22.4 million, up 21 percent from $18.5 million in Q3-2014.

Total Profit: $9.9 million, up 21 percent from $8.2 million in Q3-2014.

– Licensing revenue was $11.5 million, up 15 percent from $10.0 million in Q3-2014. This was mainly due to increased digital downloads of App/mobile games.

Profit was $7.1 million, up 20 percent from $5.9 million in Q3-2014.

– Venue Merchandise revenue was $4.9 million, up 17 percent from $4.2 million in Q3-2014.

Included was increased spending by person to $10.47/head, up eight percent from $9.69/head in Q3-2014.

Profit was $1.7 million, essentially even with $1.6 million in Q3-2014.

– WWE Shop revenue was $6.0 million, up 40 percent from $4.3 million in Q3-2014. This was due to an increase in online merchandise orders. However, average revenue per order declined to $44.47.

Profit increased to $1.1 million from $0.7 last year, reflecting a positive trend in creating more orders, even if customers are not spending as much.

(4) WWE Studios

– Total Revenue: $1.7 million, down slightly from $1.9 million in Q3-2014.

– Total Profit: WWE recorded an operating loss of $0.9 million, more than a $0.4 million loss in Q3-2014.

– WWE disclosed in their 10-Q filing with SEC that as of September 30, the company had $27.8 million feature film production assets. Of the total, $13.5 million was for films in-release, and the remaining $14.3 million was for films that are completed, pending release, in production, or developmental projects.

– WWE also disclosed that WWE Studios spent spent $4.3 million on feature film production activities, compared to $15.3 million in the prior year quarter. WWE expects to spend $3.0-8.0 million on feature film production activities during the remainder of 2015.

(5) Corporate & Other

– Total Revenue: $1.1 million, even with $1.1 million in Q3-2014.

WWE recorded $40.8 million in expenses, up $5.5 million (16 percent) from $35.3 million in Q3-2014.

During WWE’s conference call, George Barrios attributed the increased expenses to paying executives more money for reaching performance goals and increased legal fees.

In WWE’s 10-Q filing, WWE disclosed $6.3 million in management incentive compensation, up 125 percent from $2.8 million in Q3-2014.

Also, legal & accounting & professional services increased to $6.0 million from $4.9 million.

The only expense that declined from Q3-2014 was “advertising, marketing, and promotion.” WWE spent $1.4 million in this area in Q3-2015, compared to $2.1 million in Q3-2014.

WWE Revenue Break Down By Segment

(1) TV Rights – $65.2 million (39.2% of total revenue)
(2) Network – $40.9 million (24.6% of total)
(3) Live Events – $26.1 million (15.7% of total)
*** Top 3 make up 80 percent of the total ***
(4) Licensing – $11.5 million (6.9% of total)
(5) WWE Shop – $6.0 million (3.6% of total)
(6) Digital Media – $5.8 million (3.5% of total)
(7) Venue Merch – $4.9 million (2.9% of total)
(8) Home DVDs – $3.0 million (1.8% of total)
(9) WWE Studios – $1.7 million (1.0% of total)
(10) Corporate & Other – $1.1 million (0.7% of total)