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WWE Q2 financials: Record revenue, Saudi Arabia deal, more

Although profit margins did not meet analyst expectations, the news had to be considered an overall positive coming out of today's WWE second quarter business release.

The WrestleMania quarter set a record in revenue at $281.6 million, and finished with $10 million in profits. This compares to the second quarter last year which did $214.6 million in revenue and $5.7 million in profits.

The positive results saw the stock at $85.01, an all-time record, at this point in time.

Revenues were well over expectations, although the profit margin was less than most investors expected. The profits benefited from lower taxes, but also included very high executive bonuses due to other metrics met.

The huge increase in revenues comes in what is listed in the media category as $60.6 million listed as "other," up from $11.9 million. Other is listed as "Other forms of media monetization reflect revenues earned from the distribution of other content, including, but not limited to, scripted, reality and other in-ring programming, as well as theatrical and direct-to-home video releases."

The key aspect of this change is likely the Saudi Arabia deal. The company noted they have a confidentiality clause in their deal and thus did not discuss the nature of that agreement past that it was a ten-year deal that included an annual show.

The nature of the talks indicated that the idea of a November show there isn't happening as was talked about after the first show, as they specified it would be a once-a-year event.

OIBDA in the quarter was $43.5 million and the company has increased its target for the year to the $160 million to $170 million range, well above previous projections of $145 million to 150 million.

The company's cash-on-hand was $341.6 million, the highest level in years and up from $297.4 million at the end of December.

Other good news regarded the retention of WWE Network subscriptions.

In 2017, after WrestleMania, the Network had 1,661,000 subscribers, and on June 30, that number fell to 1,568,000. This year the drop was from 1,808,000 subscribers, a number inflated by all the gimmick offers, but only fell to 1,742,000, meaning a strong 11 percent increase over the same day last year. It should be noted the increase was consistent in both the United States and overseas, as opposed to just overseas growth as had been the key to much of the recent year growth.

Basically that meant that the people who sampled at lower prices this year stuck with it at full price at a much higher rate. That means whatever the reason, whether it was the programming mix or the big events during the quarter, the Network retained Mania subscribers at its best level in history.

At the investment call the company said they would be increasing the amount of content, mentioning more new events were coming.

They also expect to announce the new United Kingdom TV deal by the end of this year and the new India deal in the early part of next year. The U.K. and India deals are the second and third biggest revenue television deals they have.

George Barrios pushed that with the economic markets in India and China growing that they had to get their piece of them, noting the prioritization of those markets. They also noted that 45 percent of the talent in developmental right now is from outside the U.S., as they look to the future internationally.

Profits from the media division are significantly higher, likely due to the Saudi deal.

Live event revenue was slightly down and profits were down from $17.1 million in the quarter last year to $13.4 million this year. Attendance was down both in the U.S. and outside, but that was offset to a degree by higher ticket prices, so revenue dropped from $52.8 million to $52.3 million. But costs of touring were up.

Consumer products revenue increased from $24.6 million to $26.7 million, but operating income declined from $5.5 million to $4.6 million in the category.

If you factor out WrestleMania, North American house show attendance fell from an average of 5,500 to 5,000. International, largely the European tour, dropped from 6,300 to 5,700, but with much higher ticket prices.