STAMFORD, Conn.–(BUSINESS WIRE)–WWE (NYSE:WWE) today announced financial results for its second quarter ended June 30, 2015. For the quarter, the Company reported net income of $5.1 million, or $0.07 per share, compared to a net loss of $14.5 million, or $0.19 loss per share, in the second quarter last year.

“Our strong earnings growth was driven primarily by the expansion of WWE Network subscribers, the escalation of our television rights fees as well as strong sales of our franchise video game. For the quarter, our OIBDA surpassed our expectations”

“The performance of WWE Network demonstrates our ability to transform our legacy pay-per-view business into a global subscription business with high growth potential,” said WWE Chairman & CEO Vince McMahon. “We have made meaningful progress executing our key strategic initiatives, including the achievement of significant international growth and increased engagement across our digital and social media platforms.”

“Our strong earnings growth was driven primarily by the expansion of WWE Networksubscribers, the escalation of our television rights fees as well as strong sales of our franchise video game. For the quarter, our OIBDA surpassed our expectations,” added George Barrios, Chief Strategy & Financial Officer. “The ramp-up of WWE Networksubscribers, while exhibiting a seasonal pattern, continued to show strong year-over-year growth. Our success in developing WWE Network, maximizing our television rights fees and driving revenue growth from our global markets reinforces our long-term potential.”

WWE Network Update: Second Quarter Highlights

Network segment revenue reached a record of $131.0 million on a trailing 12-month basis that exceeded the Company’s annual pay-per-view revenue in every calendar year through 2014. During the quarter, Network segment revenue increased 57% on a pro-forma basis (excluding the timing impact of WrestleMania in the second quarter 2014)¹. Supporting the growth in revenue, WWE Network had 1,156,000 paid subscribers at quarter end, and averaged approximately 1,216,000 paid subscribers during the quarter, representing an 83% increase from the prior year quarter and a 31% increase from the first quarter 2015 average.²During the quarter, the Company premiered more than 75 hours of original content on WWE Network, increased the network’s comprehensive video-on-demand library to more than 3,300 hours, and continued to broaden its global distribution. From inception through June 30, 2015, WWE Network attracted more than 2.0 million unique subscribers with approximately 61% of these subscribers active as of that date.

• WWE Network’s compelling live and original content, including the Company’s pay-per-views, original series, NXT Live, and other specials continued to drive viewer engagement. Among the more than 75 hours of content that debuted during the quarter, original series, WWE Too Hot for TV (produced with legendary talk show host Jerry Springer), Swerved (produced with Jeff Tremaine, Director of Jackass and Bad Grandpa), and Stone Cold Podcast were among the network’s top programs. Additionally, Beast in the East, a live event special produced in Japan on July 4^th, has become the network’s most watched program to date (excluding pay-per-views).
• The Company continued to broaden the global distribution of WWE Network, which was made available in Italy and Malaysia in July, 2015. At quarter-end, WWE Networkhad approximately 217,000 international subscribers².
• During the quarter, 90% of subscribers accessed WWE Network at least once per month. Consumer research indicates that 91% of subscribers are satisfied with WWE Network.

⁽¹⁾ For more information on the timing impact of WrestleMania, see Supplemental Information – Pro Forma Income Statement & Reconciliation to GAAP Measures.

⁽²⁾ Average paid subscribers are calculated based on the arithmetic daily mean over the relevant period, and may differ substantially from paid subscribers at the end of any period due to the timing of paid subscriber additions. Trial subscribers acquired during a promotional period are not counted as paying subscribers until they convert after the end of the free period.

WWE Network Update: Future Plans

To grow WWE Network, the Company is executing a five-part strategy, including creating new content, implementing high impact customer acquisition and retention programs, introducing new features, expanding distribution platforms, and entering new geographies. Over the remainder of 2015, the Company is focused on expanding the network’s line-up of compelling original content as a critical element of this strategy.

Programming: For the remainder of 2015, the Company expects to add approximately 180 hours of original content to the network’s featured programming. Exciting original programming coming to the network includes a reality series following the stars of NXT as they strive to make WWE’s main roster, a new series Table for 3 that gives viewers a seat at the table with our Superstars and Divas, a studio show highlighting current events in the world of WWE and beyond, and new episodes of WWE 24, The WWE List, and Stone Cold Podcast, as well as teasers of Camp WWE, an animated adult series premiering in 2016. In addition, the Company plans to expand WWE Network’s robust video-on-demand library, which currently has more than 3,300 hours of content. Themed programming collections to be added to this library include The Raw Attitude Era Part 2: Austin/McMahon, WCW Nitro: Accelerating the War, and The 20th Anniversary of Monday Nitro.

Acquisition & Retention: Based on the successful execution of the network’s free trial promotions, a rolling one-month free trial program was initiated in July and marks the fourth consecutive month and the fifth month this year that the Company has implemented a free trial offering. During the second quarter, the Company enhanced the network’s “watch list” technology, providing the ability to add new programs to subscribers’ watch lists from email notifications. The Company plans to continue utilizing this capability in its subscriber communications. The Company also plans to leverage its sizeable social media and digital assets, such as video sampling on Facebook and WWE.com, to target and acquire new subscribers. To facilitate network subscriptions, the Company plans to introduce a three-month subscription card at retail, enabling a “no credit card required” payment option.

Features/Distribution: Other important elements of the Company’s network strategy include improving the user experience and content discovery across devices and continuing to expand distribution platforms. Over the coming months, the Company will continue to improve the user experience by enhancing the network’s search functionality, adding the ability to organize content as themed “collections” and allowing non-subscribers the ability to explore the breadth and depth of programs available on the service.

Geographies: The Company continues to develop plans for geographic expansion to India, China, Germany, Japan, and Thailand.

2015 Business Outlook

The rate of WWE Network subscriber adoption is a critical determinant of the Company’s projected future financial performance.

In 2015, the Company expects year-over-year adjusted OIBDA growth in every quarter, with growth driven by the performance of WWE Network, the contractual escalation of television rights fees, and continued innovation across all of the Company’s businesses.

For the third quarter 2015, the Company expects ending paid network subscribers of approximately 1.2 million, representing an increase of about 3%-5% from the end of the second quarter 2015 and an approximate increase of 64% from the end of the third quarter 2014. Additionally, the Company projects Adjusted OIBDA of $13 million to $17 million for the third quarter. Although the Company anticipates earnings growth on a year-over-year basis in the fourth quarter, it does not expect the same level of OIBDA growth as anticipated in the third quarter. (Reconciliation of Operating Income to Adjusted OIBDA can be found in the Supplemental Information included in this release).

For the full-year 2015 Business Outlook, see the Company’s Q4 2014 Earnings Release – February 12, 2015.

Comparability of Results

WrestleMania 31 occurred on March 29, 2015 and is included in first quarter 2015 results, whereas the comparable prior year event occurred on April 6, 2014 and was included as part of second quarter 2014 results. Given that WrestleMania impacted subscriber growth in April 2015 and April 2014, the Company believes the timing impact of WrestleMania on second quarter 2014 results is best estimated from the direct contribution of the event to ticket sales, merchandise sales, pay-per-view revenue, and pay-per-view production costs (excluding any attribution of subscription revenue from WWE Network). In aggregate, these items increased second quarter 2014 revenue by $35.0 million and increased OIBDA and EPS by $9.1 million and $0.08, respectively. In order to facilitate an analysis of the Company’s financial results, the Company has prepared a pro forma statement, which excludes these items from reported amounts. The impact of WrestleMania is measured using a pro forma statement rather than as an adjusting item to the Company’s reported results because adjustments to the Company’s financial measures are limited by definition to items that are difficult to predict and are considered unusual or non-recurring in nature. (See Supplemental Information – Pro Forma Income Statement & Reconciliation to GAAP Measures.)

As defined, adjusted financial measures would exclude certain material items, including but not limited to, non-cash impairments of film, intangible and fixed assets, gains and losses on asset sales, as well as material restructuring charges. In the prior year quarter, the Company recorded a $1.6 million adjustment to reduce the carrying value of the former corporate aircraft to its estimated fair value prior to its sale. In order to facilitate an analysis of financial results on a comparable basis, where noted, the Company’s results have been adjusted to exclude these items. (See Schedule of Adjustments in Supplemental Information).

Three Months Ended June 30, 2015 – Results by Region and Business Segment

Revenues decreased 4% to $150.2 million from $156.3 million reflecting the timing impact ofWrestleMania. North American revenues decreased 13% as that event positively impacted pay-per-view, live event and merchandise revenue in 2014. Excluding the impact ofWrestleMania, North American revenues increased $15.9 million, or approximately 17%, driven by the expansion of WWE Network subscribers and the escalation of television rights fees as well as increased video game sales as reflected in the Company’s Media and Consumer Products divisions, respectively. Similarly, revenues from outside North America increased 30% as these growth factors were reflected in the Company’s Media and Consumer Products divisions, respectively, across the EMEA and Asia Pacific regions. Revenue in the current quarter was reduced approximately $2.5 million by unfavorable changes in foreign exchange rates.