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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
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Hello and welcome to the webcast entitled WWE second quarter earnings. We have just a few announcements before we begin. [Operator Instructions]
I will now turn the call over to Michael Weitz, Senior Vice President, Financial Planning and Investor Relations. Please go ahead sir.
Thank you and good morning everyone. Welcome to WWE’s second quarter 2018 earnings conference call. Leading today’s discussion are Vince McMahon our Chairman and CEO as well as George Barrios and Michelle Wilson our Co-Presidents. Their remarks will be followed by a Q&A session.
We issued our earnings release earlier this morning and have posted the release, our earnings presentation and other supporting material on our website corporate.WWE.com/investors. Today’s discussion will include forward looking statements, these forward-looking statements reflect our current view, are based on various assumptions and are subject to risks and uncertainties disclosed in our SEC filings. Actual results may differ materially and undue reliance should not be placed on them.
Additionally, the matters we will be discussing today may include non-GAAP financial measures. Reconciliation of non-GAAP to GAAP information is set forth in our earnings release and presentation which are available on our website.
Finally, as a reminder today’s conference call is being recorded and the replay will be available on our website later today.
At this time, it’s my privilege to turn the call over to Vince.
Thanks. You can obviously see we delivered strong operating and financial performance during the quarter. We’re as a result raising our guidance for the full year. Of note we had two record breaking live events during the quarter. WrestleMania, is everyone knows what – every annual, it’s our big annual event and a new and Greatest Royal Rumble, which was held in Jeddah, Saudi Arabia. Both are backed – by the way it is our largest international event ever in terms of growth.
All of you know as well the future distribution of Raw and Smackdown in the US. We announced that with USA and USA Network and Fox Sports and with an AAV of 3.6 times on original deal. Of note as well some new upcoming events, there’s what we call Mae Young Classic, featuring 32 women from around the world. It’s a tournament of sorts and speaking of our female performs.
We announced just the other day our first ever all-women pay-per-view, which is entitled WWE Evolution. It’s on the October 28. And there are a number of other new events such as this that we’ll be announcing shortly. We as well are launching the short-form content entitled really the Best of WWE ever held.
That will be translated in the following languages. In Spanish, Portuguese, German and planning to produce WWE Now, which is similar Best of WWE Now in Arabic and we’re pleased with our performances before and we’re on path to continue to achieve record revenue and record adjusted OIBDA and record subscribers.
George will take it.
Yeah. Thanks, Vince. There are several key topics which we’d like to review today. These include management discussion of our business performance, progress of key strategic initiatives and our business outlook.
During the second quarter, we delivered strong financial performance as we capitalized on opportunities around the world. Particularly outside the US, our success was manifested in higher content rights fees, advertising and sponsorship sales and network subscriptions. These factors generated a 79% increase in adjusted OIBDA to more than $43 million. Based on this positive momentum, our result exceeded our quarterly guidance. As Vince mentioned, supports raising our full year guidance, which I’ll discuss further in a moment.
But first, let’s review our business performance in the quarter and turn to page 4 of our presentation, which shows the revenue, operating income and adjusted OIBDA contribution by segment as compared to the prior year quarter.
So starting with our Media segment, adjusted OIBDA increased $26.7 million based on 48% or $65.4 million increase in revenue. The revenue growth was driven by the distribution of new content in international markets, higher rights fees in our core content agreements and continued growth of WWE network.
The significant monetization of new content was an integral component of the quarter’s other media and advertising revenue. Average paid subscribers for WWE network reached 1.8 million, increasing 10% from the prior quarter. In terms of adjusted OIBDA, increases in certain production cost that include management incentive compensation partially offset the growth in revenue.
The increasing monetization of content as evident in the second quarter reflected some important operational achievements. During the quarter we produced nearly 430 hours of content, monetized new opportunities across platforms and worked to optimize our future distribution.
As Vince mentioned Monday night RAW and Smackdown Live remain the highest rated programs on USA network. We secured agreements with USA and Fox Sports effective October 2019 that increased the program’s combined AAV or average annual value in the US to 3.6 times that of our prior deal with NBCU.
Extending our reach on television, we also delivered our third captivating season of Total Bellas. We developed a new highly entertaining series MIZ & MRS that just premiered this past Tuesday night on USA Network and announced the eighth season return in this September of our successful series Total Divas.
On our streaming service WWE network pay-per-views and original programming continued to drive our viewer engagement. Some examples of our exciting new programming on the network included the Greatest Royal Rumble emanating from Saudi Arabia, the UK Championship Tournament and a new season of Camp WWE.
To these we also added more in-ring content with the announcement of our second women’s tournament as Vince mentioned the Mae Young Classic, which will culminate with the finale at our first ever women’s pay-per-view event WWE Evolution on Sunday, October 28.
On social and digital platforms, consumption of WWE content increased dramatically. Through the first six months of the year digital video views increased 58% to 14.4 billion and our fans watch nearly 510 million hours of content representing a 71% increase from the first half of last year.
Contributing to this growth reproduce more than 165 hours of social and digital content including versions of the best of WWE series in Spanish, Portuguese and German and we also plan to launch a new series again as Vince mentioned WWE Now which will be in Arabic.
As evidenced by our programs during the quarter, we are becoming more digital, direct to consumer and more global every day.
Looking at our other segments, adjusted OIBDA from our live events as shown on page 6 of the presentation declined $3 million primarily due to a reduction in ticket sales and an increase in production cost. Ticket sales at North American events were impacted by the staging of five fewer events in the quarter and 8% decline in average attendance.
Live events held in the quarter were highlighted by the staging of two record breaking events WrestleMania and the Greatest Royal Rumble. Building on the successful execution of these large scale events, we announced WWE Super Show-Down and meant to be held in Australia that will feature the largest roster of WWE superstars to appear in that country.
Adjusted OIBDA from consumer products was essentially unchanged from the prior year quarter. During the quarter we continued to develop new licensing partnerships and to expand the presence of WWE among children. Contributing to this result, we continue to increase the penetration of our mobile games. As of quarter end we have more than 90 million installs across our game portfolio led by WWE Champions and WWE Super Car, whereas our newest game WWE Mayhem which recently surpassed 12 million installs.
Page 8 of presentation shows selected elements of our cash structure and at June 30, 2018 we held approximately 340 million in cash and short-term investments. Additionally, we estimate that WWE has approximately $100 million in debt capacity under the company’s revolving credit facility. And generated 64.6 million in free cash flows compared to 1.3 million in the prior year period with growth primarily due to strong operating performance and timing in working capital.
Earlier this year, we discussed a step up in capital expenditures in 2018 to build out our video production infrastructure to support the company’s growth. We have decided to delay that spending as our plans continue to evolve. Therefore, for 2018, we now anticipate capital expenditures of $30 million to $40 million, is roughly in line with our historical average of approximately 55 of revenue. We do expect to finalize our plans for the bill that I referenced later this year and will provide further god that time.
As we indicated during our call in June 27, we expect to provide additional long-term perspective regarding WWE’s strategic, operating and financial goals after we complete our distribution plan in our remaining markets. As a reminder we expect to reach agreement regarding distribution in the UK by year end 2018 and in India in the first half of 2019.
In the first half of 2018, we’ve achieved 59% increase in adjusted OIBDA to $78.7 million. In the second half of 2018, we expected adjusted OIBDA to remain relatively flat year-over-year. This includes projected third quarter adjusted OIBDA of $30 million to $34 million and then strong fourth quarter results.
Based on our actual and projected performance, we’re now raising our target for 2018 adjusted OIBDA to a range of $160 million to $170 million, which of course would be an all-time record and exceed our previous guidance of at least $150 million. This guidance for the second half of 2018 assumes the continued to rise in revenue, increases in core fixed cost, additional strategic investments and higher management incentive compensation based on 2018 over performance.
In addition to these items, projected third quarter results also reflected timing impact of various initiatives. In the third quarter we also estimate average paid subscribers of approximately 1.67 million representing an approximate 10% increase from the prior year quarter.
Finally, in the fourth quarter we anticipate meaningful revenue growth based on the escalation of content rights fees, favorable timing of licensing revenue associated with the implementation of new fans standard, which we previously discussed.
As I had said before, our key strategic goals over the remainder of the year remain unchanged. Finalizing the global distribution plans for RAW and Smackdown, creating new content across all platforms, investing in the ongoing digitization of WWE primarily in data and our product technology and driving international growth.
We believe this strategy will engage our global fans in more ways than ever before and this part is very important. By strengthening this engagement we deepen the moat around our business, enabling us to focus on the significant opportunities in front of us. These opportunities are predicated on several global trends that include the escalating consumption of video across direct to consumer, digital and social platforms, the increasing demand for premium live branded content by all media companies and the growing middle class in key developing markets. Our execution coupled with these trends; create the foundation for sustainable long-term growth and increases in shareholder value.
That concludes this portion of our call and I’ll now turn it back to Michael.
Lisa, we’re ready. Please open the line for questions.
Thank you, sir. [Operator Instructions] We’ll take our first question from Curry Baker with Guggenheim Securities.
Good morning everyone. Thanks for the questions. I have two. The first is the Saudi Arabia partnership appear to have a big impact on results this quarter, can you maybe share some more color on the financial impact around that during the quarter, your satisfaction thus far especially with the Jeddah event and maybe give us some color about how to think about the partnership going forward and I guess what’s the ultimate opportunity there and what’s next on the horizon for the Saudi partnership?
Yeah, so in the first part in a lot of our agreements we have confidentiality clauses we’re not going to speak to the specifics any more of them were in the prepared remarks, within our earnings release and in the queue. I will give kind of a broader conceptual framework, for the last ten years or so we’ve been talking about investing in data to understand our consumers and fans better. We’ve talked about investing in video across all platforms especially an increase in the amount of video we produce for the digital and social platforms and we’ve also talk about investing in our focus on international markets, whether its people on the ground or people here across all our functions focused on that opportunity. Because of all of that the return is based on us being able to monetize the brand, sometimes in ways we see while we’re making the investments and sometimes the new and unique ways and I characterize the partnership with the GSA in Saudi Arabia as one of those. And as we mentioned it’s a 10 year partnership, it will include a major event like we just did, the timing of which we’re still we’re working through.
Okay, thanks and secondly the third quarter OIBDA outlook was softer than we had forecast, can you maybe walk us through in detail what is driving the unfavorable timing and maybe what the business in initiatives are that you flagged as a drag on the third quarter?
Yeah, I think, as I mentioned, I think it’s important to look at the back half in total, which we think is relatively flat year-over-year for the reasons we mentioned, core fixed cost growth year-over-year has a tough comp, we’ve reduced those costs last year in the fourth quarter because we wanted to make sure we met the targets themselves for ourselves last year. So you’re seeing kind of just core fixed cost get back to a normal level. We’re going to continue to invest in the business for the long term. And then specifically on the third and fourth quarter on the timing, there are some things that we moved from a year-over-year basis initiative that we had in the fourth quarter last year and investments we made that we moved up forward to the third quarter with some differences in timing on the routing of events. So there’s a couple of things between the two quarters that causes the third quarter to be a little softer and the fourth quarter again to show significant growth. So we’ll talk about in more detail when we report.
Okay, thanks George.
We’ll take our next question from Ben Swinburne with Morgan Stanley. Please go ahead.
Thanks, good morning two questions, one I think tied to the last one which is just to look at this other revenue growth in the quarter, you had 60 million of other in media from 11 million or 12 million last year. I Know you’re not going into details on specific contracts, could least help us understand George kind of the revenue recognition policies that are driving when you realize revenues in these kind of agreements and whether or not we should be thinking about this as a recurring benefit over time and any color on sort of how that business works as it flows through your financials? And then maybe a more interesting question hopefully, you guys talked about a 60% increase in digital views, 70% increase in hours viewed during the quarter I presume those are global statistics. Do you guys think you produce – you’re producing as much content as there is demand? I guess what I’m asking is, do you see big opportunity to ramp up production given what you’re seeing out there in terms of global demand for your content and if you do is the organization scaled from an infrastructure and people and systems perspective to sort of ramp that up a lot and meet that demand because you’re certainly going to have the money starting next year to do it, so I was just curious how you think about the supply demand dynamic around content.
Yeah, there’s a broader discussion of putting the investments we’re going to make on the returns we think we’re going to achieve, but we want to do that at a later time when we block down some of the other still open items kind of give a broad perspective for WWE and put the model around it, the business model. But there is no doubt that we’re nowhere near reaching the limit of the amount of content that we can create and the amount of engagement that we can drive. When you look at the numbers, we’ll do closer to billion hours of consumption across the digital platforms, not including the networks above a billion when you put the direct to consumer network. That number we think we can keep growing and we can keep growing with new content as well as localizing that content, more languages, more locally produced contents. We just think the opportunity is enormous and you know Ben, you’re right about it, this is all a fight for time, we’re all fighting for a time and so the more we can engage fans, the more ways we can entertain them with more time we can we take. So yeah, we –and as far do we have the resources, we’re going to continue invest for the long-term, we think this is a 10 plus year runway.
If you believe in the global trends we mentioned, if you believe in those then you believe in the investment we’re going to keep doing that again. And again we’ll put – we’ll size what we think those investments are some point in the future, but similar to the success we’re seeing today is because of the investments we made over the last ten years, we think success we’ll see in 10 years from now is going to be driven by the investments we make today. So that’s how we view the world. I think on the direct question the less interesting one, the deal in Saudi Arabia is unique. So you see the economics presented in the live event segment, in the media segment across advertisings, sponsorship and as you rightfully mentioned what we categorize as other. Now, other includes in addition to revenue related to Saudi Arabian event also includes Divas, includes Bellas, that’s what we characterize, it’s in essence to non-RAW and Smackdown rates because those are kind of unique agreement. So that the rev wrecks, I’d say the predominant amount for the Saudi Arabia event is in other, but we’re not going to talk about how much. It is a recurring, its a10 year deal and so it will be a recurring. The timing, when in the year it will happen so will be determined and again the timing of the event is what triggers the red wreck across all of those line items I mentioned for the most part, some delays because some of the right that the predominant with economics are in the second quarter.
That’s very helpful. Thank you, George.
We’ll take our next question from Eric Katz with Wells Fargo.
Good morning, everyone. I guess just following up on the Saudi question you mentioned another potentially big event in Australia, I’m just kind of wondering – size wise you mentioned the largest amount of superstars to appear in that country. Is this a similar type of deal, are you looking to pursue Saudi type deals throughout the rest of the world at this point?
Yeah, I think – look on the – are we looking to pursue Saudi type deals. We’re looking and it’s different market by market, it is win the battle for a time, if you do that you’re going to find ways to monetize the brand, in some ways we got a clear path of what that is and others I think we’re going to be surprised. The first thing is win the battle for time and we think the monetization opportunities will present themselves. Specifically on the Australian event, we’re incredibly excited, we’re going to absolutely thrill our Australian fans, but the deal is very different than the SA deal again, but we won’t get specific to the economics.
Okay and then on the decision to pull back on CapEx spending, does that have any short-term impacts on growth expectations and I’m not sure maybe would be helpful to maybe describe your original plan there a bit more if you’re willing to.
Yeah, I mean we had mentioned that we purchased the building here in Stamford near our current video production facility because we needed the capacity. I mean, today I think you’ve seen the footprint Eric, we’re spread around the city of Stamford and some cases actually have temporary facilities to produce the video. So we’re not going to do the build out for that facility has been planned a significant portion of that to happen this year. We delayed it because we’re evaluating those plans obviously the opportunities in front of us are incredible. As Ben mentioned, the casual profile of the company will change starting in the fourth quarter of next year. So we’re just trying to marry those two back and come up with a plan that we think best drives long- term value for us. So hopefully by the end of the year we’ll solidify those plans and then we can talk about it, but if you – historically we’ve done about 4% to 5% of revenue in CapEx, we’ve had a high of around 10% or 11% of revenue alone, about 3% of revenue at the beginning of the year. We said it’s probably going to be at the upper end of that range terms operating, we’re actually going to be writing on in the middle of the range or the average of it at some point here in the future I’d expect we will have a year or two we would be at the upper end of the range.
Sure and just one last, I guess another boring one if you don’t mind, can you remind us again of the Saudi impact on Q4? Thank you.
If you remember we’re talking about the revenue recognition from our licensing business which we used to record in essence on a lag from when the transactions were happening with the statement from our partners like take two. Now we’re making estimates during the period when the consumer transaction is happening, so last year you would have seen the primary consumer licensing revenue hitting Q1, this year I will be in Q4 and we talked about that impact in Q1 that was around $8 million of OIBDA.
Okay, thanks.
Our next question comes from David Karnovsky with JPMorgan.
Hi, thank you. Pretty NXT rollout in the UK, can you talk about why now is the right time to introduce the brand there and with the expansion of NXT into the region does this impact at all, how you’re thinking about your television distribution within that country?
So l I’ll take that one David. So on the UK Tournament right now, I think you know from the higher earnings call that we had information we put out and we actually did the UK Tournament previously a year ago and we saw tremendous results. So it’s not surprising that we repeated that from an engagement perspective on the network, it was a great success for us. So as we look at that as an opportunity similarly with the Mae Young Classic, the all-women’s tournament. Those tournaments are driving engagement on our network, obviously helping with retention and attracting new subscribers. So again we just are continuing that plan, so it’s not really coming out of the blue per se to repeat the UK Tournament. What I’ll say as far as our long-term view on that and George mentioned this, as we talked about the ability to continue to create content and is there demand. When we talk about localized we absolutely see that as a long-term opportunity for us around the world and UK Tournament is a perfect example or a manifestation of that localized content and we believe our ability to tap into local talent and the interest within that marketplace just deepens our engagement with those fans. So again we expect to do more of that moving forward and that’s just kind of the first step in terms of a UK Tournament. So again part of our overall strategy, Vince mentioned that we’re creating some short-form content in local language, so again there’s just great opportunity for us to continue to do that, so the time is now and we’ll continue to be for the next ten years as George mentioned on our international opportunities is to do more content that is globalized for that market. I’m sorry what was the second part of your question?
It was just that whether the rollout of NXT there impacts at all how you’re thinking about television distribution for the UK renewal.
Not necessarily.
Okay and then I didn’t see anything in the release on 2019, are you are you still comfortable with the guide you provided at the end of June.
Yeah, we didn’t put anything because it hasn’t changed. Yeah, so we’re still committed to delivering over 200 million of adjusted OIBDA.
Okay, thanks.
Our next question comes from Laura Martin with Needham Please go ahead.
Hi there, maybe a couple things. So can we talk about sure and you guys are gotten really good at projecting your OTT subs, are you getting better at keeping the subs, are you getting better at attracting subs Where do you think – what’s happening with churn in these outreaching numbers?
Yeah, I mean, as you know Laura, any subscription business, most important metric is retention, so the average kind of trailing 12 months continues to improve. Obviously, our churn is – it’s seasonal because of the large event especially WrestleMania, so you get bumps in there, but trailing 12 months, we continue to improve, but I will say it’s try something. Vince, Michelle and I are never happy with that number. As anyone who runs a subscription business, you always wonder why isn’t 100% retention, but it keeps improving, but we’re committed to getting the retention even better.
Okay and then looking at the – so following on something Vince said early on that you had two of the largest live events you’ve ever had, WrestleMania which set records and then Saudi Arabia. But I’m looking here at the live attendance averages and they’re falling and even in ’18 second quarter and first quarter they’re down year-over-year for the last two years. Is that because of our mix shift towards the next or is it cannibalistic with the over the top network. I would have thought live events was complimentary with the over the top network gaining like prominence, but why would our live event average just be falling?
Yeah well you know this is in North America primarily venue mix, so depending on which venue we work and quarter-over-quarter its different venues, so you’re going to get a little bit of a mix. So for us we think over the trailing 12 months if you look at it, North American attendance, it’s relatively flat and frankly it’s been that way, so both our utilization and the average attendance has been pretty consistent, so it isn’t a mix. We don’t include the NXT numbers because those events profile or the attendance profile is very different, so we think from an external perspective to see the trends it’s better to not include those numbers, so NXT has nothing to do. So nothing strategic I would say it’s more tactical depending on which venue. And similarly when we – our international events, it also depends what countries we playing in the same country profile year-over-year which is why and I always look at it and encourage investors to look at it this way, its trailing 12 months where you kind of can watch some of the quarterly changes out and from that perspective there’s really no change.
Okay and do you just sort of big picture, do you think OTT network helps a lot performance or do you think that cannibalizes because people can stay home and watch the same stuff.
No, we absolutely think it helps and even – it helps in the marketing of them, so for example because we have in the US DMA data of viewership and what people are viewing on the network, we can kind of hone the marketing message when we market digitally to our fans. As an example we launched NXT and we’re touring outside of Florida, we’re trying to decide because never done it before what markets we should go into. We use the network data of NXT viewership to kind of select the market, so we definitely don’t think it’s cannibalistic to the live event experience.
Okay, and I’m writing a lot myself about the international profile profitability profile and growth, do you think there’s any reason the international subs cannot have the same margin profile as in the US over the long-term?
Yeah, I mean if you think about the models there really no different on the margin profile right there’s a level of fixed because the US product only, so we’re creating content and then we’re attracting subscribers. So whether a subscriber comes from Germany, the UK or any other country the US – the economic profile is still the same. It’s 80% or so variable margins on the increment sub, so that doesn’t matter. We said that in the future, we’d like to localize the product and I talked about Spanish language, German, potentially Hindi and we’re working through those plans. At that point there will be some incremental fixed cost not material but there’s some incremental fixed cost around both the product and the technology to localize the actual physical product and then localize the video, so that when you have slightly different margin but not materially different.
Okay, super helpful. Thanks so much for your help, great numbers, congratulations on a great quarter guys.
Our next question comes from Vasily Karasyov with Cannonball Research.
Thank you, good morning. Just wanted to try and size up there if the impact on EBITDA of this spike in revenue in media in this what you call in the press release distributed of sort on programming content in international markets. You’ve already said that it’s going to recur again next year not clear what quarter, but my math says that it’s around 30% to 35%EBITDA margin. Can you please say if I’m in the ballpark? And the second question I had is you touched on it a little bit, but you mentioned that one of the investment areas for you is data. Can you maybe talk more beyond just targeting events what you just mentioned in what ways can a company like yours benefit from data going forward? Thank you.
Sure, on the first one the margins are higher than the ones you mentioned, again we’re not going to get specific around them, but they’re higher than what you mentioned. And for us for any direct to consumer business and again we have both the video service direct to consumer, we market our live events business especially domestically direct to consumer because most of the purchases are done online and then we have a large and what has been a fast growing commerce business, e-commerce business around consumer products, direct to consumers, so around that understanding the data of what people like, what superstars they’re favoring that help tailor the marketing message. It also allows us to create bundles where it makes sense. We do a lot of analysis on what people who are watching on YouTube, on the network, on Facebook, on our own and operated. That data gets circulated internally, so people understand what’s really driving the engagement so it’s merit of places throughout the organization, but as we continue to roll the number of user accounts we have, the theory is the better you know them more smiles you can put on their faces, the greater the monetization opportunity, that’s an essence to the flywheel.
Would you ever sell the data to a third party?
We use the data to put smiles on people’s faces that’s it. So we can entertain them, that’s what we’re using the data. Similar to how Netflix uses it, they learn about their consumers, preprogramming because they’re being spent more time on their platform that’s what we do.
All right thank you very much
Our next question comes from Eric Handler with MKM Partners.
Yes, thank you very much and good morning. A question maybe for some of the talent guys or people in the in the room, just curious we’re now entering year two of sort of the build out for the WWE UK brand, how far in the future do you think we are before we take that WWE UK brand and as we look to build out WWE network throughout all of Europe, we take that the WWE UK brand and churn it more fit into a WWE Europe brand?
So it’s a great question and again I think that as I mentioned previously David’s question that our investment in localizing content will continue to be a priority. So in terms of the timeline I think it’s going to continue to be a priority for us, how we distribute that content, the marketplace will determine and we’ll get more in tell on that moving forward. So again from a talent development perspective one of the things that we’ve talked about as we have a very successful performance center that we have in Orlando and Paul Levesque has done a tremendous job building our pipeline for talent. Interestingly if you look at the data there and as George mentioned, everything we do involve data analysis, about 44% to 45% of the talents that are now in our pipeline are coming from outside the United States. So naturally the question becomes as we’re creating local content, is there an opportunity for us to replicate what we’re doing around the world and creating and generating not only our pipeline of talent within a region, but how do you then take content and create content around that that we’re going to monetize. So as we’re kind of looking future and how we continue to build out that model that we’re currently doing here in the US, something that we’re looking at and will be part of our plans moving forward, so again you expect that to be part of what you’ll hear moving forward.
Okay and then as we talk about customization for with all the data and all the investments you made, at what – how far away are you with the WWE network to so that when people log on there’s a much more customizable home page?
Coming soon to a theater near you, we’re not to make any announcements right now.
Stay tuned.
You guys have no fun. All right thank you very much.
Our next question comes from Daniel Moore with CJS Securities.
Thank you and good morning. Are you following obviously the strong contract renewals and as we look toward the exceptional inflection of cash flow in 2020 and beyond, I know you’re not going to talk specifics in terms of numbers, but I guess generally what types of investments, growth initiatives are you considering? Are there any that maybe weren’t feasible in the past or is it kind of more of the same what financial metrics, ROC guideline and governors should we be thinking about in terms of incremental investments? Thank you.
Yeah, it’s interesting when you’re looking at some old material that we’ve shared with the board probably seven or eight years ago about the investments we’re making then and that we’re going to continue to make and we do in terms of raising the peak to top earning and cash flow profile of the business and it turns out that investments over delivered. We thought we could maybe double close to triple those and as people estimate given the reason we have probably go beyond that and that time we were 60 million to 75 million of OIBDA. So as we look to the future, we’re doing same kind of work Dan it’s thinking what the size of the opportunity, where we think we need to go capture our unfair share and then what do we think that drives in terms of shareholder value and to your point we’ll get a little bit more force once we have some remaining items behind us. But that’s kind of the lens we use. We don’t always have a clear line of sight to the opportunity of people, what is the size of the opportunity.
You take a country like India and we think GDP looks like ten years from now would, where do we think the sector in India therefore looks like and years from now. Given how many smiles we’re putting on people’s faces, what do we think our unfair share of that is and therefore how much should be investing. That’s the process and again we’re not going to pull all that numbers today, but that’s the process we use. As opposed to the heights of investments I don’t think I’d characterize more of the same, but you know we’re going to continue to invest in our digital products, we’re going to continuing invest and creating more content across every platform for additional, digital and direct to consumer. Michelle mentioned we’re going to do it in more languages across all those platforms. So in some way I guess you can say more of the same, but I think the depth and breadth will be different, something like expanding the performance center model globally that allows to not only increase the talent pipeline but create actually local content with local sort, we think it’s an amazing opportunity, it’s a 10 to 20 year opportunity for us to take advantage. So we’ll do that and yea that’s probably an example of something we might have had to do at a much slower pace if not for the success we’ve had.
That is actually very, very good color. Congrats, I appreciate it.
[Operator Instructions] We’ll take our next question from Jason Bazinet with Citi.
Just had a quick question on international, if I look back 2007 to 2017, about 25% of your revenues came I think from outside the US, bounced around a little bit but not a lot of change. When you guys think about this 45% of your talent pipeline coming from outside the US and then begin to adjust for things like GDP, per capita and the like what you think a reasonable mix shift for a company like yours that’s focused on international?
Yeah, look the way we look at is the way you just said it, I mean GDP per capita is – ultimately the M&E sector tends to be a percentage of the GDP per capita, however you want to look at it. So I always tell people if you want to rethink about the opportunity for WWE, think about what the market what percentage of consumption we’re getting, those things should help you size with the opportunities for WWE as how you think the US market frankly. So in terms of mix, I’m not going to put a number on it, but I think if you say 20 years from now, do you think the M&E sectors is growing faster outside the US than the US, I think so because you have countries like India and China GDP and therefore M&E sector is growing. So our job is to – it sounds trite, but it really is what we do is put smiles on those faces, if we do that then we should get an unfair share, but we’ve got to do the hard work.
Okay, maybe one quick follow up if you look at the consumption data that’s very robust, is your intuition that the right answer is to double down on the markets where you are internationally or is the right answer to expand into more geographies?
There’s very few geographies that we’re not in and in fact if you’re looking at digital and social, there’s not – if someone has a broadband connection in that country we’re there in that market. Is our markets we’re more invested than in others, but if you said do we need to get into a new market probably not. Do we need to go deeper in some of these big opportunities, yes, we definitely hope so.
Okay, thank you.
And there are no further questions at this time. I would like to turn the conference back over to our speakers for any additional or closing remarks.
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