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WWE Q3 financials: Revenue and profit numbers beat expectations

WWE reported this morning revenues of $186.4 million and profits of $21.8 million for the third quarter of this year, numbers that beat Wall Street estimates of $172 million and $15 million.

That would make this the first quarter in recent memory where the profits beat the dividend payout, which was $9.42 million.

The strong numbers led to a stock price increase of $2.27 per share to $23.82 at the time of this writing.

The keys were increases in profitability in most categories, with only WWE Studios and home entertainment falling below last year's numbers.

WWE Network profitability increased from $15.7 million during the third quarter last year to $24.3 million, due to a combination of more revenue and lower spending due to producing fewer original shows.

However, the 1,507,000 subscribers for the Network, while up four percent from one year ago, was a decline from the last quarter. There were 392,000 new sign-ups and 453,000 cancellations during the quarter. During the third quarter last year, there were 388,000 new sign-ups and 455,000 cancellations, so the trend was very close to identical.

This shows that the strength of the pay-per-views, as the main events were stronger this year, only has a very minor effect on subscription numbers. The other take is that the Mae Young Classic, with all the hype, really meant nothing for subscriber numbers.

They also predicted another drop in Network subscriptions, as much as 50,000, in the fourth quarter.

The pattern is for the big growth for the Network to come in the first quarter and early second quarter.

WWE also increased profitability of house shows, although it was by running more total events as the average attendance dropped from 5,300 to 4,900 per show.

Licensing profits went from $4.6 million to $6.7 million due to an increase in mobile game sales.

During the conference call, WWE pushed the idea of localized television, like they have in the Middle East and India, and have secured 20 new advertisers for television. They pushed the worldwide aspect of the product by noting that of the athletes training at the Performance Center, 40 percent come from outside the United States.

The company pushed the new television negotiations. The deal with NBC Universal expires on September 30th, 2019, while deals in the United Kingdom and India, the other two largest revenue television deals, expire on December 31st, 2019.

They are targeting a new U.S. deal and announcement sometime between May and September of 2018.