Pro wrestling mogul Vince McMahon’s once-controversial over-the-top network delivered over-the-top results last quarter, lifting the company’s stock price off the mat.
The shares surged 17.5 percent Thursday on the news that the WWE Network ended the second quarter with 1.2 million subscribers, an increase of 75 percent from a year ago.
McMahon told shareholders the network’s performance “demonstrates our ability to transform our legacy pay-per-view business into a global subscription business with high growth potential.”
Indeed, as customers switched out of WWE’s pay-per-view offerings, that segment’s revenue fell 85 percent, to $3.5 million. But they switched into the WWE Network at a pace that drove its revenue to $36.6 million — up 89 percent from the $19.4 million recorded a year ago.
WWE also got a nice boost from its television operations, which rose 19 percent to $52.1 million, thanks to the renegotiation of major domestic and international distribution agreements.
And though WWE’s total revenue declined 4 percent during the quarter, to $150.2 million, the reason had to do with the timing of WrestleMania — a premier event included in first-quarter results this year and second-quarter results last year. Excluding the impact of WrestleMania, WWE said North American revenue actually increased 17 percent in the second quarter.
Investors expressed their approval of WWE’s transition to a digital subscription business by bidding the stock up $2.88 to close at $19.36. The stock had traded below $10 per share as recently as January.
WWE signaled the good times would continue by forecasting as much as a 5 percent sequential gain in network subscribers in the third quarter, which on a year-over-year basis represents a 64 percent increase.
“The guidance suggests they have [subscriber] churn under control,” said Laura Martin, an analyst at Needham & Co.