Second Quarter 2019 Highlights

• Revenues were $268.9 million as compared to $281.6 million in the prior year quarter
• Operating income was $17.1 million; Adjusted OIBDA¹ was $34.6 million which exceeded the Company’s guidance
• Announced content distribution deals with BT Sport in the U.K. Fox Sports in Latin America and PP Sports in China providing strong platforms for reaching WWE audiences
• WWE Network average paid subscribers² were 1.69 million paid subscribers consistent with the Company’s guidance
• Digital video views increased 17% to 9.0 billion; hours consumed increased 22% to 324 million hours across digital platforms; and social media followers increased 10% to over 1.02 billion³

WWE Network

• The Company initiated the transition of WWE Network to a new platform on July 24 which will provide users with a better experience a more intuitive interface and enhanced search functionality
• The new platform enables the introduction of new features and experiences over time including the addition of free and premium tiers as well as the localization of content in multiple languages
• Produced more than 90 hours of original network content including live in-ring programs and talent documentaries such as The Shield’s Final Chapter and WWE 24: The Year of Ronda Rousey respectively

STAMFORD Conn. July 25 2019 - WWE (NYSE: WWE) today announced financial results for its second quarter ended June 30 2019.

“During the quarter we made progress on key strategic initiatives ” stated Vince McMahon Chairman and Chief Executive Officer. “We completed content distribution agreements in key international markets prepared for the next phase of our WWE Network service and achieved steady improvement in engagement metrics. As indicated previously we remain excited about the future particularly with our debut on Fox in October.”

George Barrios Co-President added “In the quarter our earnings exceeded guidance however we anticipate a portion of this to reverse and we continue to target full-year Adjusted OIBDA of at least $200 million. The guidance presupposes the staging of a second large scale international event and the completion of a media rights deal in the MENA region. As we optimize near-term results we will continue to focus on content creation localization and digitization including the evolution of our direct-to-consumer network to drive long-term growth.”

Second-Quarter Consolidated Results

Revenues declined 5% to $268.9 million from $281.6 million in the prior year quarter with lower revenue from the Company’s Media Live Events and Consumer Products business segments.

Operating Income decreased to $17.1 million from $21.2 million in the prior year quarter reflecting the decline in revenue and the impact of certain strategic investments as increases in other fixed costs were partially offset by a year-over-year reduction in accrued management incentive compensation. The Company’s Operating income margin declined to 6% from 8% in the prior year quarter.

Adjusted OIBDA (which excludes stock compensation) was $34.6 million as compared to $43.5 million and the Company’s Adjusted OIBDA margin was 13% as compared to 15% in the prior year quarter respectively. The current period results exceeded guidance primarily due to enhanced revenue recognized in conjunction with the Company’s recent event in Saudi Arabia which is expected to reverse in connection with an anticipated fourth quarter event in that country.

Net Income increased slightly to $10.4 million or $0.11 per diluted share from $10.0 million or $0.11 per diluted share in the second quarter of 2018 reflecting reduced losses on equity investments and a lower effective tax rate.

Effective Tax Rate declined to 25% from 31% in the prior year quarter.

Cash flows used in operating activities were $7.6 million as compared to $74.2 million of cash generated in the prior year quarter driven by unfavorable changes in working capital which was primarily related to the timing of the Saudi event in June as the prior year event was held in April as well as lower operating performance.

Free Cash Flow was a $27.5 million use of cash as compared to a $66.4 million source of cash in the second quarter of 2018 primarily driven by the change in operating cash flow and to a lesser extent a $12.1 million increase in capital expenditures primarily associated with the Company’s workspace plan.⁴

Cash cash equivalents and short-term investments were $296 million as of June 30 2019 and the Company estimates debt capacity under its revolving line of credit of approximately $200 million.

Second-Quarter Key Operating Metrics

During the first quarter 2019 earnings call the Company discussed the absence of several talent and the belief that these absences had a negative impact on the Company’s engagement metrics. Since the end of April the Company has achieved steady improvement in key measures.

Domestic TV ratings for Raw declined 14% in the first quarter 2019 from the prior year quarter but improved to a year-over-year decline of 11% in June. The improvement in June occurred despite a tough comparison to game 5 of the NBA championship on Monday June 10. Similarly domestic TV ratings for SmackDown declined 13% in the first quarter 2019 but improved to a decline of 7% in June consistent with the ratings performance of the top 25 cable networks which declined 7% during the month. Consumption of WWE content across digital AVOD platforms rose from a year-over-year increase of 23% in the first quarter to growth of 28% in June. Finally average attendance at the Company’s live events in North America which declined 12% in the first quarter improved to a decline of 4% for the June period (and was only down 2% for the second quarter 2019).⁵

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