World Wrestling Entertainment, Inc. Class A

Hello and welcome to WWE's first quarter earnings conference call. If you are listening through a phone line, you may ask a question verbally by pressing star then 1 on your touch tone phone. If you wish to be removed from the queue, please press star 2. I will now turn the call over to Seth Zaslow, Senior Vice President and Head of Investor Relations. Please go ahead Seth.

Thank you and good morning everyone. Welcome to WWE's first quarter 2023 earnings conference call. Joining us on today's call are Nick Kahn, WWE's chief executive officer, Paul Levesque, our chief content officer, and Frank Riddick, our president and chief financial officer. Following our prepared remarks, we'll open the call for questions. We issued our earnings release earlier this morning and have posted the release and other supporting materials to our website. Today's discussion will include forward-looking statements. These statements reflect our current views, are based on various assumptions, and are therefore subject to risks and uncertainties. Please refer to our SEC filings for a discussion of the risks and uncertainties. Actual results may differ materially, and undue reliance should not be placed on these statements. Additionally, we will be discussing certain non-GAAP financial measures on today's call. Reconciliations of non-GAAP to GAAP information are provided in our earnings release and other supporting materials. Lastly, today's call is being recorded and the replay will be available on our website. With that, I'd now like to turn the call over to Nick.

Thanks, Seth. Good morning and thank you everyone for joining us today. 2023 is off to a strong start. Our results in Q1 exceeded our guidance and our business is well positioned going forward. I, along with Frank, will touch on some financial and operational highlights from the quarter in more detail. But before we do, I want to take a moment to address a few other topics. As we announced in January, Vince McMahon and WWE initiated a process to review strategic alternatives with the goal of maximizing value for all shareholders. We conducted a fulsome process, and the market response was astounding. After assessing all options, we announced an agreement on Monday, April 3rd, the morning after a historic two-night WrestleMania at SoFi Stadium in Los Angeles, to combine WWE and UFC into a new, soon-to-be-named, publicly listed company that will trade under the stock ticker TKO. The combination of WWE and UFC creates a one of a kind, highly complimentary, pure play global sports and entertainment business that will unlock vast revenue synergies and cost synergies. The transaction is subject to customary closing conditions, including the required regulatory approvals, but we are working intently to get that done. We expect that will happen in the second half of 2023. With the conclusion of the strategic review process, we're now heavily focused on the domestic media rights renewals for Raw and SmackDown. And we are currently engaged with our incumbent partners, NBCU and Fox, both of whom have been terrific. With the ratings and viewership success we've been seeing for Raw and SmackDown, we believe we are well positioned as we enter these conversations. Of course, we remain focused on the day to day operations of WWE and delivering growth. This was evidence four weeks ago at WrestleMania 39, which I mentioned earlier. WrestleMania 39 delivered the most watched and most profitable event in our company's history. A number of new records for WWE that highlight the strength of our company. Record attendance at WrestleMania with over 161,000 fans. Record gate revenue of over $21.5 million. Record domestic viewership with over 15 million hours consumed and a 31% viewership increase year over year. Record sponsorship sales with over $20 million in revenue, a year over year increase of over 100%. Record venue merchandise revenue of over $7 million, beating our previous record of $5.2 million which we set at the year prior WrestleMania. We blew through records across our social platforms, generating over 500 million views and 11 million hours of video consumed over the two-day WrestleMania event, a 42% increase over the prior year. Internationally, the event was seen by over 35 million viewers. Our premium live event success and growth is not limited to WrestleMania, In Q1, we staged Royal Rumble in San Antonio. It was our most viewed and highest grossing Royal Rumble in company history. In February, we took our product to Canada, where we held Elimination Chamber in Montreal. The event delivered a 54% year over year viewership increase, a 300% sponsorship sales increase, and generated more gate and merchandise revenue than any Elimination Chamber in WWE history. Strategically, we hosted this event in Canada, a key international market, and one where we will also be focused on our next media rights deal. These metrics are a clear sign of our popularity in the region. As our premium live events see viewership increases, our flagship weekly TV properties are also seeing growth, bucking the trend across the rest of the landscape. In the first quarter of 23, overall TV viewership in the 18 to 49 demo was down 16%. Not at WWE. Raw was up 16% in the 18-49 demo, and it was the number one program in the demo on cable on Monday nights. SmackDown, also up 7% in the demo and the number one program in the demo on broadcast on Friday nights. And our fans that are tuning in are watching longer than ever. Raw and SmackDown are at their highest time spent viewing in their history. at 73 minutes for Raw, a three-hour show, and 42 minutes for SmackDown, a two-hour show. We are also filling arenas and stadiums at a record-breaking pace. Demand remains incredibly strong. We saw a 52% increase in our North American live events revenue year over year, led by higher attendance and smarter ticket pricing. WWE is consistently generating the highest ticket grosses in the history of many markets, as we continue to tour weekly, everywhere from Los Angeles and Chicago to Toledo and Little Rock. We are not seeing any signs of a slowdown. This upcoming Saturday, August 5th, is SummerSlam at Ford Field in Detroit, another stadium event. Tickets went on sale last month and we saw record first day sales for the event. More tickets were sold at on sale for this upcoming SummerSlam than any other domestic WWE show in our company's history outside of WrestleMania. In the coming weeks, we expect to be opening up new sections of Ford Field so we can keep up with the demand. Let's talk merchandise for a moment. Last month, we announced that WWE and Fanatics are expanding our relationship. So Fanatics can now do our venue merchandise sales in addition to the already existing and growing e-commerce business that we have with Fanatics. In-venue sales have been a substantial growth area for us over the past two years as we have taken a localized approach of offering location and city-specific merchandise to drive sales. This new partnership with Fanatics should supercharge those sales. Looking ahead, the coming months are an exciting moment for our company as we embark on our biggest run of international shows in WWE history. This coming Saturday, backlash will emanate from San Juan, Puerto Rico, where Bad Bunny will compete in ring against Damian Priest in what will be a completely sold-out arena. We also received a seven-figure subsidy for this event. We are in a dialogue with a number of different local governments, tourism groups, and event organizations about the economic impact of WWE when our events come to town. Look for more updates on this in the future as these conversations progress. On May 27th, the Saturday of Memorial Day weekend, return to the Jetta Superdome for one of our biannual shows in the region, Night of Champions. We close out our international run on Saturday, July 1st, which is the Saturday of the July 4th weekend, with Money in the Bank at the O2 Arena in London, our first premium live event in London in over two decades. We will also have Friday Night Smackdown the night before, also at the O2 Arena. Both Money in the Bank and SmackDown will air live at 8 p.m. local UK primetime as our United Kingdom media rights conversations continue. We expect that both of these events in London will be sold-out shows. As with all of our events, we expect all of the premium live events to deliver year-over-year growth while showcasing and growing our global footprint. In closing, I want to reiterate how pleased we are by the performance of our business. We're excited about 2023 and expect to deliver another year of record revenue and adjusted . Our company is well positioned, and we are very optimistic about our historic agreement with Endeavor and the UFC. Until then, we are focused on closing that deal while continuing to execute on our strategy and grow our business. It's an amazing time for WWE, and we remain extremely excited about our long-term future. With that, I'll now turn the call over to Frank.