WWE released their 2014 Second Quarter Earnings results on Thursday morning. On the surface, the numbers don’t look so hot:
The company reported a Net loss of $14.5 million, or $0.19 per share, compared to Net income of $5.2 million, or $0.07 per share, in the second quarter last year. Excluding items affecting comparability, adjusted Net loss was $13.5 million, or $0.18 per share in the current year quarter, compared to Net income of $5.2 million, or $0.07 per share, in the second quarter last year. WWE Network reached 700,000 subscribers at quarter end.
If they lost $13.5 million in the quarter and reported “only” 700,000 WWE Network subscribers, why did the stock spike over 10% after the results were reported?
It’s all about Wall Street’s expectations and their revised business outlook for for the remainder of 2014, which is looking a lot better thanks to the company’s aggressive cost cutting measures.
Analyst Capital IQ Consensus was expecting a loss of $0.20 per share. WWE reported a loss of $0.18 per share, better than expected. Revenues rose 2.6% year/year to $156.3 million, also better than the $154.7 million expected.
The revenues were bolstered by a number of factors, including North American live event attendance increasing by 11% in the quarter. However, a major factor in the company’s improved outlook is their identification of “efficiencies” –
We identified efficiencies across WWE, which include a 7% reduction in staff, and improved our 2015 OIBDA outlook by $30 million.