Recap from the WWE Q2 2022 investors call
WWE Chairwoman & Co-CEO Stephanie McMahon, Co-CEO Nick Khan, Executive Vice President of Talent Relations Paul “Triple H” Levesque, Chief Financial Officer & Chief Administrative Officer Frank A. Riddick, and Senior Vice President & Head of Investor Relations Seth Zaslow hosted a Second Quarter 2022 Earnings call today from WWE headquarters in Stamford, CT. You can check out coverage of today’s press release at this link. Below are highlights from the call:
Zaslow welcomed everyone to the Q2 2022 call and went over the basics. He turned the call over to Stephanie, who thanked everyone for being here. Stephanie said before going over some of the highlights from Q2, she’d like to address the recent management changes. Stephanie said after 40 years of running WWE, her father Vince McMahon has retired. She says as a true founder and entrepreneur, Vince, and her mother Linda McMahon, poured their heart and soul into building WWE, taking the business from a regional wrestling promotion to the global media enterprise it is today. She says Vince built the foundation that WWE stands on and he prepared them for the future. WWE and the Board of Directors have had a succession plan in place, and it is a privilege and honor for her to be leading WWE with her partner Nick Khan as Co-CEO, and Paul “Triple H” Levesque, who she reminds us is also her husband, leading talent & creative.
Stephanie says she and Triple H first met Nick in 2015 when Nick was representing a talent, and their relationship grew as the three worked during WWE’s TV rights negotiations, and it became quite clear how they worked well and how tremendous of an asset Nick would be to the team. She said they all independently fell in love with WWE as kids, and now they have the opportunity to live their dreams as professionals. Stephanie says they will work alongside each other to maximize shareholder value by continuing to grow WWE along all lines.
Stephanie then went over some of the revenue numbers and the highlights from the press release. She touted record results for any Q2. She noted that whether it’s broadcast, streaming, cable or digital, WWE will continue to be a leading brand, capturing fans at multiple touch points. Stephanie then reiterated how humbled and committed she will be to WWE in hew new role. She says she literally spent her entire life in and around WWE, and has a deep appreciation and respect for the brand, the employees, and Superstars that make WWE a unique media property unlike anything else in sports and entertainment.
McMahon turned the call over to Khan now. Khan went over some of the highlights from today’s press release, and touted significant success with WWE’s NFT offerings, noting that their first NFT collection sold out in less than 24 hours, and the second sold out in less than 16 hours. He mentioned how they have seen significant increases in live events and consumer products. He touted the WWE Shop re-launch with Fanatics and said there will be an expanded assortment of products. Khan said WWE has exceeded the full year performance for trading cards with Panini, and more will be released later this year. He said WWE’s first offerings with On Location for Hell In a Cell and SummerSlam exceeded all sales from the prior events.
Khan touted The Undertaker’s one-man show during SummerSlam being a sell-out, and how WWE Clash at The Castle sold out in three hours with more than 45,000 tickets sold for that event. Khan said there will be more, and they drew in the area of 50,000 for SummerSlam. He revealed that they will be back in Saudi Arabia during the first weekend of November. Khan then turned the call over to Triple H.
Triple H said he’s had the good fortune of spending more than 30 years in this business, whether it was at the office, the writer’s room, at the WWE Performance Center, and many of those at the same time, and whatever the opportunity was, he took it. He always wanted to learn behind-the-scenes, to find out why we did what we did so he could apply those learnings and be the best talent. He is incredibly confident that WWE has the right team in place to succeed moving forward. He said part of the mission is orchestrating storyline and creative to appeal to the current fanbase and to grow the WWE Universe. He believes we’ve seen initial signs of this positive momentum with recent happenings in WWE. He touted Brock Lesnar’s frontloader entrance at SummerSlam and said he’s been in the business a long time, and seen a lot, but nothing ever like that. Fans responded in the arena and online. He noted that the moment with Lesnar raising the ring and Undisputed WWE Universal Champion Roman Reigns had 20 million views across all social platforms within 48 hours. He said they will continue to create moments and memories that last a lifetime, and they will get there by writing compelling storylines for the most intriguing characters, and on top of that, developing new talent.
Triple H said talent is an area with renewed focus in WWE. He touted how WWE NIL launched last December to identify the next generation of Superstars from collegiate athletics, and in 9 months they have signed over 30 D1 athletes and that includes All-Americans, national champions, even Olympic gold medalists. He touted WWE NIL as an industry leader in NIL programs. Outside of NIL, they are taking steps to make the talent development pathway to be more robust in an effort to attract a younger, more diverse group of athletes. He touted success of the WrestleMania and SummerSlam tryouts, and said in the first half of the year they signed nearly 50 new developmental talents with an average age of 23. He said the quality and depth of the talent pipeline is as strong as its ever been, and they continue to find new innovative ways of recruiting and developing talent across the globe, which is core to WWE’s growth and reflective of the expanding fanbase. He touted how that fanbase turned out at SoFi Stadium for the WrestleMania 39 Launch Party last week, and this brought WWE the most successful first day of ticket sales for any WrestleMania event in history. He noted how they sold over 90,000 tickets within the first 24 hours, more than any event in WWE history and a 42% increase over first day sales from WrestleMania 38. He said WrestleMania 39 is roughly at 80% sold for an event that is still 8 months away, with no matches announced for Night 1 or Night 2. He said in 40 years WWE has never sold that many tickets to WrestleMania that quickly, and those record numbers are leading to sell-outs with passionate fans for both nights. Triple H said it’s an amazing time for WWE and he looks forward to the next steps. He turned the call over to Riddick.
Frank thanked Triple H and went over some of the numbers from today’s press release linked above. Riddick mentioned how Vince McMahon resigned and another executive left the company, referring to John Laurinaitis without naming him. He said the investigation into misconduct is “substantially complete” and talked about how they have revised previous financial statements based on findings from the investigation. It was mentioned that Vince is paying back the amounts, past what is not covered by insurance, and they expect additional costs related to the investigation. More notes on the investigation from the WWE SEC filing can be found here.
Frank mentioned how WWE is well-positioned to take advantage of opportunities, and they will be capitalizing on their global audience to support growth across all business lines. Frank wrapped up and now it’s time for the Q&A with investors. They were asked about the RAW rights with Hulu and if it’s better to wait and package it with the RAW and SmackDown rights fees that are coming up. Khan said it’s a delicate balance and it’s something they discuss all the time, something he’s always thinking about. They were asked about more markets bidding for events and offering subsidies for WWE holding events there. Khan noted that they are receiving a subsidy for Clash at The Castle in Cardiff, and they are looking to do that with more major events.
Triple H was asked about opportunities he sees in regards to improving and freshening up the product. He recalled how a great man, Vince McMahon, once told him about “first day on the job thinking” and that’s what they’re doing now. He said he’s been doing this a along time behind the scenes, and approaching it from “first day”, what is and what isn’t working from the overall picture, all the way down to the smallest of details and really trying to create from there. Triple H said it all comes down to the same thing it’s come down to since the beginning – to create iconic characters, put them into amazing and fantastical storylines, and whatever works the best for those characters, running with it and watching how fans react along the way. He said the opportunity is massive, for only for WWE to engage with the stars they have but to create new stars as well, and to create a platform and opportunity for those stars to become bigger than anything we’ve seen before.
Stephanie was asked about her prepared remarks and how she said she remains committed to WWE, and how she had just taken a leave of absence before being “forced” back into the interim role before being named the new Chairwoman and Co-CEO. The investor asked her to tell investors whether being Co-CEO is what she wants for the longterm, and how important it is to her personally to continue the family legacy. Stephanie said she’s worked in WWE since she was around 8 years old, modeling merchandise for a catalog, then when her parents couldn’t afford a nanny, she sat with the receptionist at WWE HQ on weekends. She said her entire life has been for the business, she loves the business, and when she took the leave of absence she was just realizing that she needed a little time with family dude to the WWE schedule and nature of the job. She said she got around 3 weeks, which is more than a lot of people get. She said she was not “forced” into returning in the interim role, she offered to return and took on the opportunity for her to come back and be a part of the company she loves, and the opportunity to lead the company. She said the business is something she believes in to her core, the impact it has on people’s lives, not only seeing so many opportunities to grow the business, but because of the impact they make on people’s lives they are truly bringing people together for generations, all over the world. She continued and said WWE gives people relief, gives them entertainment, and the opportunity to come together. This is very rare and unusual, and special, she said. Stephanie said whatever WWE can do to continue to deliver that promise is what they want to do. She understands the remarks the investor made, and she realizes she is reading between the lines, but with that said, Vince is still very much a controlling shareholder, and he still has his eyes on what is the best for the business in terms of maximizing the returns to shareholders. She said Vince is still the biggest shareholder, and the team of herself, Nick, Paul and Frank remain focused on delivering maximum results to shareholders, and to properly evaluate any opportunity that comes their way with that lens in mind.
They were asked about the new WWE HQ in Stamford, CT. They will spend $270-$300 million, which is in line with previous expectations, and they expect to be 75-80% done by the end of this year. Khan mentioned how they are discussing another possible international Premium Live Event, and more international touring. They sold out the recent overseas tour, and they continue to do well in France and Germany. Khan said the UK ratings are strong, and one of the reasons for the Clash at The Castle event, so that they could have a local UK stadium event for fans there. He believes they will see an increase in UK viewership going into Clash at The Castle, and coming out of it. Khan mentioned how WWE is the second-most popular sport in India. It’s a distant second after cricket, but still the #2 in India. They continue to register in a meaningful way in Australia as well.
They were asked about how WWE business will respond to a recession. Frank noted how when using the 2008 recession as a point of reference, then they were a business made up of 30% contractual and 70% transactional, but now it’s the other way around as profit has expanded with media deals and the WWE Network, the business has shifted to 70% of the business being contractual and 30% being transactional. If there is a recession, they haven’t seen any impact. That impact would be lower because of how the business is set up, and the impact would be for areas that are transactional, such as live event tickets and merchandise.
They thanked everyone for participating in the call and for their interest in WWE. That’s it for the call