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WWE 2022 Q4 And Full Year Financial Analysis: Record Revenue, TV Viewership, 2023 Outlook, More

Wrestling
Carlos Toro Feb 2, 2023 10:22PM

A new year presents new expectations for WWE and a chance to look back on the prior year’s finances and whether or not it met expectations.

On the latter, WWE broke projections set out at the beginning of 2022 and nearly beat out those expectations when the company later adjusted them months later.

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Record-setting financial results, stabilized TV viewership and growing opportunities to capitalize on potential ventures created a path for 2023 to have another tremendous year for the company. Despite the potential questions regarding the future of the company from Vince McMahon’s involvement to further creative changes and the possibility of a company-wide sale, there is far more to be excited about from a financial standpoint. WWE stock is way up from this point last year and barring any catastrophic news, there is very little chance of the stock returning to that point last year anytime soon.

“2022 was another strong year for WWE. We generated record financial results and our business continued to perform well due to the strength of our content and brand, which drove audience engagement and monetization across multiple platforms,” said Nick Khan, WWE Chief Executive Officer. “In 2023, we’re focused on continuing to execute on our key operational initiatives, such as the domestic licensing of our flagship programs, Raw and SmackDown, as well as the international licensing of our content in key markets. At the same time, we’re focused on the review of strategic alternatives that we announced earlier this year, with the goal of maximizing value for all shareholders.”

Frank Riddick, WWE President & Chief Financial Officer, added, “For the year, we achieved record revenue and Adjusted OIBDA, which was at the very high end of our upwardly revised guidance range. In 2022, Adjusted OIBDA increased 19% reflecting 18% revenue growth. Our financial performance was primarily driven by the return to a full year of ticketed live events, including the staging of two large-scale international events, as well as the contractual escalation of rights fees for our flagship weekly programming and premium live events. In 2023, we anticipate Adjusted OIBDA of $395 to $410 million, reflecting continued revenue growth and relatively flat operating expenses.”

2022 Full Year and Q4 Financials:

Once again, WWE set record profits and revenue for the entire year, though that did not come as a surprise. The company finished 2022 with a net revenue of $1.2915 billion, the highest in company history and up from 2021’s $1.0952 billion. Operating income also increased 11 percent to a record $283.3 million for 2022 compared to 2021.Net income for the company finished at $195.6 million for 2022, up from 2021’s $177.4 million net income.

When it comes to the Adjusted OIBDA, the company announced a 19 percent increase to a record $384.6 million. This more than beat out WWE’s initial projections for 2022 as it believed the Adjusted OIBDA range could go anywhere from $360 million to $375 million. As the year progressed, it was starting to become clear that it was going to beat out those projections and WWE changed those projections to $370 million to $385 million. Even with the adjustment in expectations, WWE nearly beat that out when it was all said and done.

Looking at strictly the fourth quarter financials, WWE’s net revenue was up from $310.3 million in 2021 to $325.3 million in 2022 due to an increase in network revenues related to the timing of premium live events, which resulted in an additional event in the current year period. The increase was also related to the delivery of third-party original programming. Results included the staging of a large-scale international event in both the current and prior year periods.

Both net income and operating income were down this past quarter. Net income finished at $38.8 million, a decrease from 2021 Q4’s $60.9 million thanks to a decrease in operating performance.

Overall, things remained relatively steady compared to last year with increases in certain areas and decreases with reasonable justifications that overall didn’t affect the company’s bottom line, nor did it prevent the company from setting record numbers.

As far it’s Adjusted OIBDA is concerned, WWE finished at $90.2 million last year, down from 2021’s $94.2 million. Despite the slight decrease, it still far outweighed what it did in 2020’s Q4, which had a Total Adjusted OIBDA of $51.2 million.

TV and Premium Live Event Viewership A Win For WWE:

With television viewership across the board going down year-to-year (18 percent according to Khan in the earnings call), WWE’s viewership in the United States not only remained relatively steady, but in the case of SmackDown on FOX, actually increased.

SmackDown enjoyed a solid return to form, averaging 2.061 million viewers in the 4th quarter for 2022, up seven percent from 2021 Q4 where it averaged 1.932 million viewers per episode. For the full year, SmackDown averaged 2.12 million viewers per episode for 2022, up two percent from the year before which did 2.077 million viewers per episode.

As for Raw, which airs on the USA Network, WWE’s Monday show did see a slight decrease in viewership both in Q4 and throughout 2022 compared to those same time ranges in 2021. For Q4 2022, Raw averaged 1.593 million viewers, down two percent from 2021 Q4’s 1.631 million viewers. For the entirety of 2022, Raw averaged 1.735 million viewers per episode, down one percent from 2021’s 1.758 million viewers per episode.

Even though WWE noted on the earnings call that the entertainment value is similar between Raw and SmackDown, the disparity in the viewership change year-over-year partly stems from the fact that Raw’s competition on Monday nights is different from SmackDown’s competition on Friday night. Raw had to compete with Monday Night Football, which has been a regular occurrence for decades, but this past year was a little bit different. Along with Monday Night Football’s telecasts on ESPN and its other platforms with the “Manningcast,” there was an increase in Monday Night Football games airing also on ABC, which did not help WWE’s viewership during football season as it presented an even greater televised platform for football games to be televised in.

This stability in television viewership isn’t surprising given the number of factors that may have led to these viewership numbers. WWE’s change in leadership at the top after Vince McMahon’s 2022 departure and the well-received storyline involving Roman Reigns, Sami Zayn, The Usos and Solo Sikoa are among those reasons that would explain where television viewership stands at this moment.

WWE’s success in the viewership aspect of television bodes well for the company, especially as the company will soon enter negotiations for core content rights fees as those current deals with FOX and NBCUniversal are set to expire in 2024.

While WWE’s television viewership range from 2021 to 2022 ranged anywhere from a two percent drop to as much as a seven percent increase, cable and network television viewership elsewhere is a different story. Top 25 cable network viewership is down nine percent from 2021 to 2022 while top four broadcast network’s viewership is down seven percent from 2021 to 2022.

As for the company’s premium live events on the Peacock streaming services, WWE touted the success and yearly growth for such shows. Khan noted on the earnings call that aggregate viewership for premium live events on Peacock is up 43 percent from 2021 to 2022. In addition, Khan mentioned the following viewership increase from 2021 to 2022 for the following events:

  • Royal Rumble: a 52 percent increase
  • Extreme Rules: a 36 percent increase
  • Crown Jewel: a 70 percent increase
  • Survivor Series: a 46 percent increase

WWE's Growing Attendance Figures:

Attendance for WWE’s live events in North America saw an increase for Q4 from approximately 5,200 per event (48 events) in 2021 to 5,500 per event (54 events) in 2022. Internationally, WWE events drew in approximately 4,200 people per event (seven events) in 2022 Q4, up from the approximate 3,700 per event (nine events) in 2021 Q4.

The increase in events and attendants in those events in North America led to higher ticket sales for 2022 Q4 with $19 million, up from the $15.8 million in 2021 Q4.

For the year, WWE’s live event revenue more than doubled what 2021 produced from $57.8 million to $123.1 million. This was expected, mainly thanks to the fact that the first half of 2021 didn’t feature any events with paid fans in attendance.

Ticket sales for international events for 2022 went way up ($12.1 million) compared to 2021 ($4.6 million) with WWE’s Clash at the Castle netting a roughly $8 million live gate.

Live event ticket sales for this current quarter appear to be off to a great start after the recent Royal Rumble premium live event in San Antonio, Texas. That event set the all-time event record for a live gate at $7.7 million with another main roster premium live event -- Elimination Chamber in Montreal -- still in tow for this quarter.

As far as merchandise sales at those events, 2022 Q4 finished at $4.5 million, up from the $3.5 million that 2021 Q4 generated. For the year, WWE generated $23.8 million in merchandise sales up from $10.1 million generated in 2021.

Last year, multiple events set records for in-venue merchandise sales with Khan pointing out a couple of numbers from the Extreme Rules and Survivor Series events. The 2022 edition of Extreme Rules saw a 62 percent increase for in-venue merchandise sales over 2021, which previously held that event’s record for merchandise revenue. The same can be said for the 2022 Survivor Series, which did 73 percent more merchandise sales revenue than the 2021 edition of the event.

Expect similar numbers to be touted by WWE on next quarter’s earnings call as the 2023 Royal Rumble did 135 percent more merchandise revenue than 2021. Khan said it was highest domestic in-venue merchandise sales ever for any non-WrestleMania event in the company’s history.

2023 Business Outlook:

A strong 2022 paved the way for what is expected to be yet another record-breaking year in 2023. WWE laid out its 2023 business outlook on its earnings press release, which includes another record in Adjusted OIBDA with a range from $395 million to $410 million and another all-time record revenue.

In addition to the Adjusted OIBDA projection range, WWE believes it is primed to capitalize on a number of business opportunities, including a potential renewal for NXT’s domestic licensing agreement and the release of the upcoming WWE2K23 video game, which WWE touted the early reviews and sounded hopeful in the earnings call that it will sell very well.

Below is the full company business outlook for 2023:

The Company is targeting Adjusted OIBDA of $395 - $410 million for the full year 2023, which would be another all-time record result. The Company also expects to generate another year of all-time record revenue in 2023. This anticipated performance reflects an expected increase in media rights fees for the Company’s flagship weekly programming and premium live events, as well as a full live events touring schedule, including two large-scale international events, and an increase in advertising and sponsorship revenues. The Company anticipates that 2023 operating expenses will be relatively flat as an increase in costs to support the creation of content are offset by a decline in third-party original programming expenses, due to the timing of the production of premium WWE-themed series and specials, as well as a decline in eCommerce expenses as a result of the transition of the Company’s digital retail platform to Fanatics.

Management believes WWE is well positioned to capitalize on significant future opportunities. In 2023, key initiatives that could have meaningful implications on the Company’s performance include the renewal of the domestic licensing agreement for NXT, the renewal of licensing agreements for WWE content in certain international markets, the monetization of new third-party original programming, growth in advertising and sponsorship sales, and the performance of the latest installment of the Company’s flagship video game franchise, WWE 2K23.

Providing perspective on WWE’s targeted revenue growth and Adjusted OIBDA outlook, Mr. Riddick commented, “We continue to believe that WWE has significant long-term growth opportunities and is well positioned, particularly given our substantial cash and capital resources, to deliver on its strategic initiatives. In 2023, we will continue to evaluate our financial performance, balancing Adjusted OIBDA growth with increased investment that will support our ability to deliver appealing content, strengthen our engagement with a broadening audience, and drive long-term shareholder value.”

As for the first quarter of 2023, WWE projects its Adjusted OIBDA to be in the range of $65 million to $75 million, down from last year’s $111.7 million in Q1. However, the expected drop in Adjusted OIBDA is primarily due to the fact that WWE won’t be staging a large-scale event outside of North America this quarter, unlike in 2022 when it held its Elimination Chamber premium live event in Saudi Arabia.

In terms of revenue, WWE did note that it is also expecting a decline year-over-year thanks to that lack of a large-scale international event. Still, expect some growth in certain avenues of revenue thanks to the escalation of media rights fees for both Raw and SmackDown.

Other News & Notes:

  • When the stock market closed today, WWE’s stock closed at $85.31 per share, already showing significant growth year-over-year when the market closed at $47.81 per share. Although the stock has gone down a bit compared to the $93.63 per share it had in January, the stock could still grow with the growing expectations that more record profits and revenue are coming this year and that the next core content rights fees will be even better than the current deals with FOX and NBCUniversal.
  • On the subject of Vince McMahon and his future in the company, Khan said on the earnings call that McMahon would step down if it was in the company’s best interest, saying, “Yes. Without question. He's declared it to the board. He's declared it to us in management. It's all about shareholder value. Obviously, he is a shareholder. So, it's not about what role he'll have. It's about maximizing that value opportunity.”
  • Khan talked about what could be on the table and what WWE would do to try and make sure that all potential buyers and parties interested in either the company, securing the next set of media rights deals, or both, had a chance at the negotiating table: “The strategic and media rights process, the right of first kick-in in short order for both of our incumbent partners. So if WWE did new deals for Raw and SmackDown -- so let’s say the current deals are five-year deals for the US media rights. If we did new five-year new deals, it would take a number of potential buyers off the table. So, we wanted to go into it with the approach that any of these potential buyers, people who are looking to own the content that they put on their platforms, that they get an opportunity to potentially make an offer while of course we respect all of our contractual language with both of the incumbent partners.”
  • Khan spoke about NXT’s ratings on the earnings call and said USA Network and NBCUniversal are content with where the show stands now but talked about the different expectations compared to Raw and SmackDown: “USA is thrilled with it. NBCU is thrilled with it. Keep in mind, as much of its own brand as NXT is, it’s still our farm team. It’s still our feeder system to get folks called up to the main roster. So, the expectation there is not the expectation we and others have for Raw and SmackDown. But certainly, the expectation for the outside world is the same as our world as inside, which is growth which is I think what we are seeing.”
  • Paul “Triple H” Levesque touted the success of the WWE-produced Netflix series “Contra Las Cuerdas.” At the earnings call, Levesque said that after two days of release, the show was the third-most in-demand show in Mexico on Netflix and all new series premiering on any Mexican platform. Levesque added that the show was No. 2 on the Top 10 most watched shows on Netflix in Mexico.
  • Fielding a question about a small re-class from the third quarter to the fourth quarter in media from core rights to digital, WWE said on the earnings call, that there was an error in contract interpretation that had about a $10 million impact: “There was a re-class that went back several quarters. There was an error in interpreting one of our contracts in allocating funds between linear TV as far as the deal and streaming part of the deal. It was a calculation error. We went back and corrected that and restated the periods. It had about a $10 million impact for the period. No change in bottom revenue to media.”
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