Prompt:
Human: On our call today is our CEO, Hikmet Ersek; and our CFO, Raj Agrawal.
During the call, we will discuss some items that do not conform to generally accepted accounting principles.
We have reconciled those items to the most comparable GAAP measures on our website, westernunion.com, under the Investor Relations section.
We will also discuss certain adjusted metrics.
The expenses that have been excluded from adjusted metrics are specific to certain initiatives, but may be similar to the types of expenses that the company has previously incurred and can reasonably expect to incur in the future.
We appreciate you joining us today to discuss our third quarter results and the progress of our business.
Our business continues to rebound from the effects of the COVID-19 pandemic delivering double-digit revenue growth in digital and Business Solutions as well as strong profitability and operating cash flow during the quarter.
Additionally, we are continuing to make good progress on our key initiatives, including our pricing evolution and platform enhancements.
Now let's take a closer look at the third quarter results.
Overall, we achieved revenue growth in the quarter of 2% on a reported and constant currency basis, which was driven by 15% growth in digital and 31% growth in Business Solutions.
While these two business grew nicely, the Retail business was affected by the slower economic recovery, in particular, recovery in the labor markets where employment of migrant workers remains below 2019 levels.
As a result, our C2C revenue was flat on a reported basis or down 1% in constant currency terms with transaction growth down 1%.
Both principal per transaction and cross-border principal increased approximately 4% during the quarter.
Year-to-date, our cross-border principal increased 19%, reflecting the elevated levels of support that our customers provide to their loved ones during the period of uneven economic recovery.
With that, based on the latest World Bank forecast, we believe we are growing market share.
Our digital business continues to generate strong growth.
Revenue generated during the quarter was $266 million, maintaining the record high level that we achieved in the second quarter and putting us well on pace to exceed $1 billion in revenue this year.
Most of our digital business is westernunion.com, which grew at a healthy pace in the third quarter with 16% principal growth and 12% revenue growth.
Wu.com average monthly active users increased 8% in the quarter.
Although wu.com growth is moderating as expected, as we grow from a much larger base and compare results against the prior year's accelerated growth levels, we anticipate growth to remain healthy as we continue to invest in marketing, product and customer experience.
We were particularly encouraged by the results we are seeing in our account-to-account business, which is the fastest-growing portion of our business.
The other component of our digital business is digital partnerships.
Momentum is building in this business as we expand relationships with existing partners and launch new partners.
We recently completed our previously announced acquisition of a minority stake in stc Bank, formerly known as STC Pay, which was a leading digital wallet service provider and is now in the process of launching as one of the first digital banks in Saudi Arabia.
In addition, we are planning to launch a number of new partners in upcoming months.
Our progress confirms that the capabilities we have built to serve our branded direct digital business is also well suited to serve the needs of leading banks and digital wallet providers.
Our solution emphasizes flexibility and choice built on a strong foundation of compliance and technology.
We are able to offer a branded solution partners who want to feature our leading brand in cross-border payments or we can offer capabilities that partners incorporate as a white label solution.
Our real-time account payout capabilities, currently available in over 100 countries, improve on incumbent solutions while also providing choice for consumers who preferred to direct transfer to our agent network.
We recently announced that Western Union International Bank has joined SEPA Instant Credit Transfer scheme as a direct participant, further enhancing our real-time payment capabilities in Europe.
Our capabilities have focused on cross-border remittances historically, but partner needs are evolving to include broader use cases.
Thus, as we have integrated with traditional payment systems in the past, our platform can also be extended to incorporate future use cases related to digital currencies.
Key to our success, whether serving our direct consumers through our branded offering of -- or serving the customers of our partners is our omnichannel capabilities, which enable payouts to more than 200 countries and territories in over 130 currencies through our extensive global network of billions of bank accounts, millions of wallets and cards, and approximately 600,000 retail locations.
We continue to invest in expanding our payment capabilities to provide our customers and partners with additional options and convenience across platforms, devices, borders and currencies.
Turning to our profit performance in the quarter.
Profitability was strong, with operating margin increasing to approximately 25%, as a result of solid Business Solutions revenue growth and lower planned marketing investments, which was partially offset as we continued to invest in our technology and global omnichannel platform.
Earnings per share for the quarter was $0.57 on a reported basis and $0.63 on an adjusted basis.
Before turning it over to Raj to discuss our financial performance for the quarter in more detail and our updated 2021 financial outlook, I'd like to provide an update on a few key strategic initiatives.
Starting with Business Solutions, our planned divestiture remains on track.
The majority of the business and the entire proceeds are expected to transfer in the first quarter of 2022.
As we announced earlier today, we are expanding our ecosystem strategy.
We are on track to launch our digital bank pilot in Germany and Romania in the fourth quarter, offering customers a digital banking and integrated money transfer solution through our Western Union International Bank.
The digital banking offerings Western Union branded WU Plus is an important part of our ecosystem strategy, which is focused on bordering and deepening our relationship with customers by offering them additional relevant products and services.
Another component of our ecosystem strategy is WU Shop, a shopping and cash back rewards program that enables our customers to shop internationally at over 12,000 online stores and send gifts directly to their families and friends in other countries while receiving cash back on their purchases.
WU Shop is now live in Germany and Austria, several more countries, including the U.S., are targeted to launch by year-end.
Overall, despite an uneven economic recovery and the continuing effects from the pandemic, our business proved resilient, and we are on solid footing as we finish the year.
Today, I will discuss third quarter results and our full year 2021 financial outlook.
Third quarter revenue of $1.3 billion increased 2% on a reported and constant currency basis.
Currency translation net of the impact from hedges benefited third quarter revenues by approximately $3 million compared to the prior year.
In the C2C segment, revenue was flat on a reported basis or decreased 1% constant currency.
B2C transactions declined 1% for the quarter as the slow recovery from COVID-19 impacted retail money transfer, partially offset by 19% transaction growth in digital money transfer.
The spread between C2C transaction and revenue growth was one percentage point on a reported basis and flat on a constant currency basis.
Total C2C cross-border principal increased 4% on a reported basis or 3% constant currency, driven by growth in digital money transfer.
Total C2C principal for transaction or PPT continued to grow and was up 4% or 3% constant currency, driven by mix and changes in consumer behavior.
Digital money transfer revenues, which include wu.com and digital partnerships increased 15% on a reported basis or 14% constant currency.
Wu.com revenue grew 12% or 11% constant currency on transaction growth of 9%.
Wu.com cross-border revenue was up 16% in the quarter.
Regionally, wu.com revenue growth was led by North America and Europe and CIS.
Digital partnerships continued to show solid growth across revenue, transactions and principal in the quarter.
Moving to the regional results.
North America revenue decreased 2% on both a reported and constant currency basis, on transaction declines of 5%.
Constant currency revenue was impacted by U.S. outbound, including U.S. regulations concerning Cuba that limit our ability to provide services there and continued declines in U.S. domestic money transfer.
Revenue in the Europe and CIS region declined 3% on a reported basis or 5% constant currency on transaction growth of 3%.
Our digital business continued to generate strong transaction and revenue growth, offset by softness in the retail business.
The digital partnership business in Russia was the primary contributor to the spread between transactions and constant currency revenue in the quarter.
Revenue in the Middle East, Africa and South Asia region declined 2% on both a reported and constant currency basis, while transactions grew 2%.
The digital partnership business continued to generate strong performance, driving regional transaction growth in the quarter and was the main contributor to the spread.
Constant currency revenue declines were driven by the regional business.
Revenue growth in the Latin America and Caribbean region was up 25% or 26% constant currency on transaction growth of 10%.
Constant currency revenue growth was generally broad-based as the region recovered from prior year economic dislocation due to COVID-19 with growth led by Mexico, Chile and Ecuador.
The driver of the spread between transactions and constant currency revenue growth was due to business mix.
Revenue in the APAC region increased 1% on a reported basis and declined 1% on a constant currency basis while transactions declined 13%.
Constant currency revenue in the region continued to be impacted by COVID-19.
Business Solutions revenue increased 31% on a reported basis or 28% constant currency.
Revenue growth was driven by increased payment services activity and the education vertical, while trends remained on a positive course with the continuing recovery in cross-border trade.
The segment represented 9% of company revenues in the quarter and benefited by growing over lower revenue in the prior year period.
Other revenues represented 5% of total company revenues and increased 3% in the quarter.
Turning to margins and profitability.
The consolidated GAAP operating margin in the quarter was 24.8% compared to 22.7% in the prior year period, while the consolidated adjusted operating margin was 25.2% in the quarter compared to 23.5% in the prior year period.
The GAAP and adjusted margin increases were primarily driven by revenue growth and lower planned marketing investment, partially offset by higher technology investment.
The GAAP operating margin also benefited from prior year restructuring costs.
Adjusted operating margin excludes M&A expenses in both the current and prior year period and last year's restructuring expenses.
Moving to segment margins.
Note that M&A expenses are included in other operating margins for both the current and prior year period and segment margins exclude last year's restructuring charges.
B2C operating margin was 24.3% compared to 24.6% in the prior year period.
The slightly lower operating margin was due to higher technology spend as we continued to invest in our platform partially offset by lower planned margin investments.
Business Solutions operating margin was 32.9% in the quarter compared to 10.5% in the prior year period.
The increase in operating margin was primarily due to increased revenue.
During the last 12 months, the Business Solutions segment generated $402 million of revenue and $86 million of EBITDA.
Other operating margin was 18.3% compared to 20% in the prior year period due to higher M&A costs this year related to the divestiture of Business Solutions.
The GAAP effective tax rate in the quarter was 20.2% compared to 12.4% in the prior year period, while the adjusted effective tax rate in the quarter was 13.7% compared to 12.7% in the prior year period.
The increase in the GAAP effective tax rate was due to deferred taxes recorded on the pending sale of Business Solutions.
GAAP earnings per share or earnings per share was $0.57 in the quarter compared to $0.55 in the prior year period, while adjusted earnings per share was $0.63 in the quarter compared to $0.57 in the prior year period.
The increase in earnings per share reflects the benefit of revenue growth and lower planned marketing investments, partially offset by a higher tax rate and higher technology investment.
GAAP earnings per share includes a $0.05 impact related to the deferred taxes recorded on the pending sale of Business Solutions.
Turning to our cash flow and balance sheet.
Year-to-date cash flow from operating activities was $686 million.
Capital expenditures in the quarter were approximately $35 million.
At the end of the quarter, we had cash of $1 billion and debt of $2.9 billion.
We returned $170 million to shareholders in the third quarter, consisting of $95 million in dividends and $75 million in share repurchases.
The outstanding share count at quarter end was 404 million shares, and we had $558 million remaining under our share repurchase authorization, which expires at the end of this year.
Moving to our outlook for 2021.
Today, we provided an updated financial outlook reflecting recent business trends in macroeconomic conditions.
As Hikmet mentioned earlier, the pace of recovery from COVID-19 has created a fluid environment.
For example, GDP expectations were revised downwards in recent months and labor markets have not fully recovered.
Our outlook assumes that the macroeconomic environment will be similar to what we experienced in the third quarter, while our previous outlook assumed a moderate improvement.
We now expect full year 2021 GAAP revenue growth will be approximately 150 basis points higher than constant currency revenue growth.
Our previous GAAP revenue outlook calls for a mid- to high single-digit increase.
Constant currency revenue, excluding the impact of Argentina inflation is expected to grow between 3% and 4%, while our previous outlook call for a mid-single-digit increase.
Our operating margin outlook has not changed, with the full year GAAP operating margin expected to be approximately 21%, while the adjusted operating margin is expected to be approximately 21.5%.
Compared to the third quarter, fourth quarter margins are expected to be closer to the full year average as we anticipated from incremental investment in lower revenue from Business Solutions in the fourth quarter, which benefited from seasonal factors like tuition payments.
We continue to anticipate our effective tax rate will be in the mid-teens range on a GAAP and adjusted basis.
GAAP earnings per share for the year is expected to be in the range of $1.80 to $1.85 compared to the previous outlook of $1.82 to $1.92, reflecting the tax impact related to the pending sale of Business Solutions.
We are also raising the bottom end of the range for adjusted earnings per share with a new range of $2.05 to $2.10, which compares to $2 to $2.10 in our previous outlook.
To summarize, we're pleased with the progress we continue to make toward achieving our long-term strategic objectives.
And operator, we are now ready to take questions.
 Assistant:

Chosen response:
compname reports q3 adj. earnings per share of $0.63.
q3 adjusted earnings per share $0.63.
q3 gaap earnings per share $0.57.
q3 revenue $1.3 billion.
western union - consumer-to-consumer revenue were flat on a reported basis, or declined 1% constant currency, while transactions declined 1% during quarter.
sees 2021 gaap revenue: about 150 basis points higher than constant currency revenue growth.
sees 2021 revenue on constant currency (excluding impact of argentina inflation): about 3% to 4% growth.
sees 2021 gaap earnings per share in a range of $1.80 - $1.85.
sees 2021 adjusted earnings per share in a range of $2.05 - $2.10.
advances ecosystem strategy with launch of wu shop and an upcoming pilot of digital banking services in select countries.


Prompt:
Human: Leading today's discussion are Vince McMahon, WWE's Chairman and CEO; Nick Khan, WWE's President and Chief Revenue Officer; Stephanie McMahon, WWE's Chief Brand Officer; and Kristina Salen, WWE's Chief Financial Officer.
Their remarks will be followed by a Q&A session.
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.
You should note that all comparisons are versus the year-ago quarter, unless otherwise described.
Like every other form of entertainment, we're sports.
We're coming out of COVID.
At first, we were in survival mode, but we found a way.
Once we felt secure, we then saw this as an opportunity too.
We think the way we do business and open what, I call, a WWE treasure chest, the only way to do that the best management team in WWE history.
We have that team, a team that's innovative, drives revenue and as we organize our company in a far more efficient way to take advantage of new revenue streams, new online platforms, new consumer products, new content creation and new opportunities to expand our media rights portfolio on a global basis, I'm always excited about our business.
I don't think I've ever been as excited as I am now.
This is Nick Khan.
It's going to be nice to speak with all of you again.
Since our last earnings call, there have been significant developments in the media industry.
We'd like to discuss them and how the economics of these deals signal to us, a marketplace that continues to put premium on live content.
Additionally, we'd like to outline a number of new revenue streams we've identified in the recent corner -- quarter, excuse me.
I will end by providing an update on our expanding original programing slate, as well as giving you an update on our return to live events and touring.
Recent developments in media have been highlighted by the completion of new content distribution deals.
First, as we discussed last earnings call, Amazon grabbed the Thursday Night NFL package.
So we have no inside knowledge of this, we wouldn't be shocked if Amazon was negotiating now, as we speak, to get that package on its air exclusively early.
In terms of leads, both the NFL and NHL realized substantial increases in the rights fees for their license programs, demonstrating the continuing value of live content.
The NFL saw a media rights increase of 79% even as linear ratings went down a little bit in recent season.
The NHL has already doubled its media rights AAV, having sold just over half of its package.
In the case of the NHL, linear ratings are down about 25%.
In this context, the NHL received tremendous credit for already doubling its AAV from $200 million to $400 million, with another package still available for sale in the marketplace.
Our bet is that part of the package goes to a new suitor.
These deals are indicative of where the media rights marketplace is and where it continues to head.
One of the big takeaways to us, if you look at these packages, is that the overwhelming majority of the media networks are paying to license both the linear rights as well as streaming rights.
The days of splitting those rights appear to be over for the moment.
Look at the NFL, which often sets the standard in media rights negotiations.
Each media partner outside of Amazon paid a multiple of what they were previously paying for the rights to show the games on linear or digital or both.
It's clear to us that these companies view live rights as meaningful subscription and retention programing for their OTT services.
We are confident that our robust marketplace with interested buyers across broadcast cable and OTT positions our rights portfolio for long-term growth.
We had an early case study in WWE delivering audiences for our partners' streaming services a little over two weeks ago, when our premiere event, WrestleMania, was distributed for the first time exclusively on Peacock in the United States.
We were thrilled with the result and our partners at Peacock were even happier.
Stephanie will provide a more thorough update on these achievements from WrestleMania momentarily, but we couldn't be more pleased with the first event.
The promotion from our partners at Fox and NBCU leading into it and the number of conversations we have engaged in subsequent for the Peacock partnership announcement.
And coming off of the subscriber and viewership success of WrestleMania that was delivered to Peacock, we're excited about possibly replicating the licensing of WWE's network to potential streaming partners in key international territories.
It's a story we're sharing with the international community as we introduced WWE Network to potential partners across the globe.
If you look at the success that we're having with our Tencent deal in China, we've seen a 30 times increase in views across all platforms in China, since striking this deal, with 30% of that coming from the viewership on Tencent.
We look at the success we continue to have in India and the United Kingdom, we're excited to replicate that and to grow it further.
Of course, content rights are not our only revenue focus, we're always looking at new streams of revenue.
On April 10, our first day of WrestleMania, we dropped our first NFT, featuring iconic moments from the Undertaker's legendary WWE career.
Many of these sold out in seconds.
We were thrilled with our first foray into this space.
Considering our vast library of wholly owned intellectual property, look for more NFTs from us in the near future.
In this quarter, we also made a key deal in the gambling space.
Stephanie is going to provide background on that deal later as well.
As we continue to expand WWE's brand beyond the ring, we remain focused on developing the slate of original programing from our WWE Studio.
We've sold a multi-episode animated series to Crunchyroll, which, as all of you know, is now owned by Sony, Young rock, which we've talked about previously, chronicles the real life journey of Dwayne Johnson from childhood to WWE legend and beyond.
They debuted on NBC and it's doing significant business on NBC and with rears on USA and Peacock.
And last Sunday, the Stone Cold Steve Austin documentary was the highest-rated biography in 16 years on A&E.
Our other show on A&E that night, WWE's Most Wanted Treasures retained 79% of that lead end audience.
There are seven more biographies featuring our superstars each Sunday for the next seven weeks.
Again, all of these projects from sitcoms to unscripted to documentary to animate are produced or co-produced by us via our Studio.
Last, as I mentioned earlier, stay tuned for our announcement showcasing our full-time return to live event touring.
This year's WrestleMania was historic for many reasons, attracting more than 50,000 fans, representing full capacity for the two-night event.
I would be remiss if I didn't mention how amazing it felt to have the opportunity to stand on the stage, look out at the faces in the audience and hear their cheers.
From the superstars next to me to the people in the crowd to even maybe my father Vince McMahon, there wasn't a dry eye as we all celebrated something much bigger than ourselves, the power of the lion.
Last year's WrestleMania with no fans at our performance centers went back to Raymond James Stadium with a full circle moment, providing a sense of hope for the future and where our signature then, now, forever became then, now, forever together.
It is because of this powerful fan base, what we call the WWE Universe that we were able to achieve record-breaking performances across all of our platforms, including reaching new audiences through our domestic streaming partner, NBCU's Peacock.
And a world went 52 days, we successfully launched our partnership with Peacock with cross-functional task forces responsible for assimilating meta data, transporting and formatting our most viewed content and creating marketing direct to consumer campaigns and one of the most comprehensive publicity plans we have ever had for WrestleMania.
One executive at Peacock described our process as a best-in-class example for how partnerships should work.
The results with the most viewed live events in Peacock's young history.
The launch was supported by two integrated media campaigns executed across the Comcast, NBCU, Peacock and WWE portfolio.
WrestleMania media coverage increased 25% with over 500 individual new stories, representing 1.2 billion media impressions.
Creatively, everything kicked off the Friday before with the WrestleMania addition of SmackDown on FOX, where Jey Uso won the esteemed Andre the Giant Battle Royal.
Sasha Banks and Bianca Belair became the first African-American female superstars to main event WrestleMania.
Pop star, Bebe Rexha, saying the national anthem and hip-hop star, Wale, rapped Big E down to the ring.
Grammy award winning artist Bad Bunny and YouTube influencer Logan Paul found themselves getting in on the action inside the ring.
Bad Bunny's performance received praise from ESPN, counting it as one of, if not, the most impressive showings by a celebrity in the ring.
And apparently, a lot of people enjoyed seeing YouTube influencer Logan Paul gets stunned as he trended number two on Twitter and generated nearly 100 million impressions on social media alone.
WWE also secured a record 14 new and returning blue chip partners for WrestleMania, including Snickers as the presenting partner for the sixth consecutive year and presenting partner of the main event.
Papa John's Cricket Wireless, P&G's Old Spice, Credit One Bank and DraftKings.
DraftKings is now an official gaming partner of WWE, focusing on their signature free-to-play pools, which included placing some fun bets on main event matches in both nights of WrestleMania.
Video views during WrestleMania week across digital and social platforms, including YouTube, Facebook and Instagram, hit 1.1 billion and 32 million hours of content were consumed, representing a 14% and 9% increase, respectively.
WWE related content saw 115 million engagements and WrestleMania was also the world's most social program, both nights of the weekend, delivering 71 Twitter trends.
As Nick mentioned, for the first time, we launched a series of NFTs, featuring the Undertaker at record-breaking WrestleMania weekend e-commerce sales and record merchandise per capita sales in stadiums.
We also held more than 10 community activations throughout the week, including collaborating with the Mayor's Office to customize our vaccination messaging for the local market, recognizing local community champions, teaming with FOX Sports to donate equipment to Special Olympics, Florida, and working with various organizations, including Feeding Tampa Bay to combat food and nutrition and security.
On USA Network, the following Night Raw delivered its best performance in the 18 to 49 demo in over a year and NXT's debut on its New Night on Tuesday was up 29% in the 18 to 49 demo year-over-year.
As we move toward our next streaming special, WrestleMania Backlash on Sunday, May 16, we are excited to build on our recent success, grow our audience through Peacock's enhanced reach, align with Iconic franchises, such as the Olympics and the Super Bowl and continue to leverage Peacock sales and promotional teams.
Additionally, key brand metrics in the first quarter are as follows.
TV viewership continued to remain stable, maintaining a trend that began when we transitioned out of the performance center and invested in WWE ThunderDome at the end of August.
From that time to the end of this quarter, Raw ratings have held steady and SmackDown ratings increased 9%.
Notably, all Raw appearances featuring Bad Bunny showed an increase of 31% in the Hispanic persons 18 to 34 demo.
And Bad Bunny's total social impressions during the time of his story lines equaled nearly 700 million.
Digital consumption increased 7% to 367 million hours.
WWE's flagship YouTube channel crossed 75 million subscribers and is now the fourth most viewed YouTube channel in the world.
WWE sales and sponsorship revenue increased 19%, excluding the loss of a large scale international event.
As I mentioned on our last call, brands are looking for unique ways to reach their consumers.
WWE is perfectly positioned to do just that with the ability to create customized content experiences and utilize WWE superstars that resonate with target audiences.
For example, the creation of our digital content series, Grit & Glory, for GM's Chevy Silverado brand and the creation of a new superstar, the Night Panther and a first-ever campaign integration across multiple platforms to market the new scent from Old Spice.
In our view, WWE is well positioned to continue to elevate our brand, grow our business and engage new and existing consumers across all media platforms.
As Vince, Nick and Stephanie highlighted, transitioning WWE Network to Peacock, while launching WrestleMania with a live audience of 50,000 fans in attendance is a major accomplishment.
I would add by the flexibility, speed and sheer brute force of will demonstrated by the WWE team, the innovative and entrepreneurial spirit on display was as strong as I've seen in my 25-plus years prior in the tech industry.
Today, I'll discuss WWE's financial performance, which underscores that spirit.
As a reminder, all comparisons are versus the year ago quarter, unless I say otherwise.
In the first quarter, WWE continued to manage a challenging environment.
Total WWE revenue was $263.5 million, a decline of 9% due to the cancellation of live events, including a large scale international event and the associated loss of merchandise sales, all due to COVID-19.
Despite this decline, adjusted OIBDA grew 9% to $83.9 million, reflecting the upfront recognition related to WWE's licensing agreement and the decline in operating expenses that resulted from the absence of live events.
Looking at the WWE media segment, adjusted OIBDA was $107 million, growing 4% as increased revenue and profit from WWE's licensing agreement with Peacock, as well as increased revenue from the escalation of domestic core content rights fees more than offset the absence of a large scale international event.
During the quarter, we continue to produce Raw and SmackDown in our state-of-the-art environment, WWE ThunderDome, at Tropicana Field in St. Petersburg, Florida.
Our operating results continue to be impacted by the year-over-year increase in production costs associated with bringing nearly 1,000 live virtual fans into our show, surrounded by pyrotechnics, laser displays and drone cameras, we did achieve some efficiency quarter-over-quarter.
With the April transition of WWE ThunderDome to Yuengling Center in Tampa Bay, we expect this investment will continue through at least the second quarter as it elevates the level of excitement and brings our fans back into the show.
Despite a challenging environment, WWE continues to produce a significant amount of content, nearly 650 hours in the quarter across television streaming and social platforms.
And as Nick described, we continue to develop our slate of original programing from our WWE Studios.
Live events adjusted OIBDA was a loss of $4.3 million due to a 97% decline in live event revenue.
These declines were due to the loss of ticket revenue, resulting from the cancellation of events.
As we've said, we are delighted to have entertained ticketed fans and an audience of over 50,000 at WrestleMania a few weeks ago.
We look forward to the highly anticipated return of regular ticketed events.
However, predicting the pace of that return is challenging and as of this moment, we do not anticipate staging such events until at least the second half of 2021.
WWE also continues to introduce new products, leveraging a superstar talent brand and strong distribution partners.
As examples of WWE's continuing commitment to product innovation, WWE released three new championship title belts and a suite of branded products to commemorate Stone Cold Steve Austin's 25 years at WWE.
Also in the quarter, WWE continue to be the number one action figure sold at Walmart, where it continues to deliver exclusive products.
In the first quarter, WWE generated approximately $54 million in free cash flow, which was down slightly.
Improved operating performance and lower capital expenditures were offset by the timing of collections associated with network revenue.
Notably, during the first quarter, we returned approximately $84 million of capital to shareholders, including $75 million in share repurchases and $9 million in dividends paid.
To date, more than $158 million of stock has been repurchased, representing approximately 32% of the authorization under our $500 million repurchase program.
As of March 31, 2021, WWE held approximately $461 million in cash and short-term investments, which reflected the repayment of the remaining $100 million borrowed under WWE's revolving credit facility.
Accordingly, WWE estimates debt capacity under the revolving line of credit of $200 million.
And finally, a word on WWE's business outlook.
Last quarter, WWE issued guidance for 2021 adjusted OIBDA of $270 million to $305 million.
This range of guidance reflects estimated revenue growth, driven by the impact of the Peacock transaction, the gradual ramp up of ticketed live events and large scale international events and the escalation of core content rights fees, offset by increased personnel and television production expenses.
The company is not changing full-year guidance at this time.
The guidance range is subject to risk over the remainder of the year, particularly related to the impact of ongoing COVID-19 restrictions on the company's ability to stage live events, including large scale international events.
Turning to WWE's capital expenditures, as we mentioned last quarter, we anticipate increased spending on the company's new headquarters, as we restart this project in the second half of 2021.
For 2021, we've estimated total capital expenditures of $65 million to $85 million to begin construction, as well as to enhance WWE's technology infrastructure.
We're in the process of reevaluating the headquarter project and will provide further guidance on future capital expenditures when that work is completed.
For the second quarter of 2021, we estimate adjusted OIBDA will decline as incremental profits from Peacock and the escalation of content rights fees are more than offset by increased production, personnel and other operating costs.
As a reminder, the year-over-year rise in television production costs reflects the impact of our investment in WWE ThunderDome relative to the lower cost of producing content from our training facility, as we did exclusively in the second quarter of last year.
As the timing and rate of returning ticketed audiences to WWE's live events remain subject to uncertainties, we are not reinstating more specific quarterly guidance at this time.
In the first quarter, WWE generated solid financial results as we executed on key strategic objectives.
As Vince, Nick and Stephanie mentioned, we believe we can continue to innovate, enhancing our fan engagement, driving the value of our content and developing new products and markets, as well as cultivating new partnerships.
We look forward to sharing our progress on these initiatives with you all.
That concludes our remarks, and I will turn it now back to Michael.
 Assistant:

Chosen response:
q1 revenue fell 9 percent to $263.5 million.
not changing full year guidance at this time.
q1 2021 results were up, largely driven by impact of wwe network-peacock licensing agreement.


Prompt:
Human: Leading today's discussion are Vince McMahon, WWE's Chairman and CEO; Nick Khan, WWE's President and Chief Revenue Officer; Stephanie McMahon, WWE's Chief Brand Officer; and Kristina Salen, WWE's Chief Financial Officer.
Their remarks will be followed by a Q&A session.
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.
You should know that all comparisons are versus the year ago quarter unless otherwise described.
We generated solid second quarter financial results as we focused on fan engagement and increasing efficiency in our content production.
We have positive trends in our OIBDA and the demand for our live event ticket sales as well as our television ratings and digital consumption.
Live events that have aired through July 26 have been at closure at full capacity.
We have advances for our live events that looked excellent including I might add SummerSlam,, which will be the largest SummerSlam event we've ever had here in the United States.
Television ratings for our initial shows were up significantly.
First-time we played before large crowd on July 16, it was up 42% increase in 18 to 49 demo, which was extraordinary, Raw of 15% as well.
In the quarter, we implemented certain organizational changes that will also increase efficiency and our content production on the post event.
I'll give you a little bit more information on that.
Looking ahead, we believe we can take advantage of the evolving business environment as we always have crowd engagement developing business and will drive growth.
Do you want to go, Nick?
Nice to speak with you all again.
As always, we'd like to start with some industry perspective.
In our last earnings call, we discussed how earlier this year the NFL, NHL and Major League Baseball realized substantial increases in the rights fees for their license programs even with lower linear television ratings.
The NFL saw media rights increase of 79%, the NHL more than tripled its media rights AAV and Major League Baseball is getting a higher per game rate as part of its new Disney deal.
The second quarter was another busy quarter with deal activity.
A number of rights holders closed media rights deals that saw substantial increases or their product, both in their home market, as well as in other territories.
Also in this quarter, we saw a number of private equity firms invest in sports teams, primarily based on the assumption that there was growth opportunity yet to be realized for their media rights.
Additionally, Steph and I would like to touch on the growth opportunity that exists in our sponsorship segment.
We will end by updating all of you on a number of WWE deals from this quarter that have led to new revenue streams.
The top Spanish soccer division, La Liga, closed an eight-year deal with Disney in the United States with an estimated AAV of $175 million, which represents a 35% increase from their prior deal with ESPN.
Wimbledon recently announced its 12-year extension with Disney in the U.S. and a three-year extension with the BBC in the U.K. Both deals saw significant increases.
Also in this quarter, private equity from RedBird Capital announced that it was acquiring a 15% stake in an Indian Premier League cricket team valuing the team between $250 million and $300 million.
Part of the rationale for this investment stems from the rising value of media rights for live sports content globally.
We're confident in saying this because we are seeing similar growth for our own international deals.
Just last week, we renewed our deal in Australia with our partners at Foxtel securing an increase for package of rights in that territory.
As we begin our efforts to license WWE Network internationally, we are encouraged by the trends we saw this quarter and are confident we will continue to see success as we engage with our partners internationally.
More on that to come in the future.
As Vince mentioned at the top of the call, ratings are up across all of our shows following the return of live fans.
Stephanie will provide more details on the ratings growth shortly.
Allow us to discuss Peacock for a moment.
Four months into the Peacock partnership, we are seeing the benefits of a streaming partnership with a platform that has broad distribution and continues to grow.
Since moving to Peacock, viewership of our pay-per-view events have increased with Backlash up 26%, Hell In A Cell up 25%, and Money In The Bank up 46% from the prior year performance on what was the stand-alone WWE Network.
These viewership numbers are also up considerably from our pre-pandemic WWE Network numbers.
As you recall, when we announced the Peacock deal, we said one of the key reasons for the partnership was to bring the WWE product to a wider audience than those subscribed to WWE Network.
We expect viewership of WWE to continue to increase, particularly as Peacock rose its base of users.
We also wanted to discuss our return to live event touring with you.
As many of you know, we made our return to live event touring on Friday, July 16 with SmackDown on FOX from Houston, Texas.
One nuance to know here.
This was not a return to live events for us.
We held live events with fans via video screens throughout the pandemic, not one week of production missed.
So, again, this is really our return to touring with live fans, felt great for the fans, for our Superstars and for our business.
Normally, we won't walk you through the specifics of events; however, today, allow me to give you a taste of how our live events are performing.
On Friday, July 16 at the Toyota Center in Houston, Texas, we sold out.
This event was the highest-grossing non-pay-per-view event in WWE history in Houston.
Our merchandise sales for that night almost 50% greater than they were for our last event in Houston.
Please keep in mind that these merchandise figures come off of a phenomenal e-commerce sales period throughout COVID.
Two nights later at Money In The Bank on Sunday, July 18 at Dickies Arena in Fort Worth, Texas, we sold out.
This event was a highest-grossing non-WrestleMania event in WWE history in the Dallas-Fort Worth area.
Our merchandise sales for that night, almost the 100% greater than they were for our last event in the area.
These two arena sold out prior to John Cena surprise return at the end of the second show, the end of the Money In The Bank show that is.
The very next night, Monday, July 19 at American Airlines in Dallas, just down the road from Fort Worth, with a highest paid attendance in Dallas in over three years, our merchandise sales for that night almost 50% greater than they were at our last 2019 event in the Dallas-Fort Worth area.
Our next live event, SmackDown, this past Friday from Cleveland.
This event was our highest grossing non-pay-per-view gate in WWE history in Cleveland.
Our merchandise sales for that night over 60% greater than they were at our last event in Cleveland.
That same night, this past Friday, we also made our first-ever appearance for either our Raw or SmackDown brands at a music festival in the U.S. Rolling Loud, the preeminent hip-hop music festival, which was in Miami, over 230,000 paid attendees over the course of that three-day event, two WWE matches including our SmackDown women's champion, Bianca Belair coming off of her and Sasha Banks' ESPY win for best WWE moment in front of over 75,000 fans on Friday night, almost all under the age of 25.
We saw strong merchandise sales there as well.
The next night, we held our first non-televised live event since the pandemic from Pittsburgh.
This was the highest-grossing non-televised live event gate in WWE history in Pittsburgh, 95% of tickets sold.
Our merchandise sales for that night, more than 25% greater than they were at our last event in Pittsburgh.
And the night after that, another non-televised live event from Louisville, Kentucky.
This was the highest-grossing event at the KFC Yum Center in WWE history and a highest paid attendance for a non-televised event in Louisville in over five years.
Our merchandise sales for that night, more than 25% greater than they were at our last event in Louisville.
On Raw this past Monday, just three nights ago from Kansas City, Missouri.
This is our highest grossing WWE non-pay-per-view event in Kansas City in 14 years.
Our merchandise sales for that night were almost 50% greater than they were at our last Kansas City event.
Also in the quarter, we added the ability to purchase merchandise via our app for in-venue pickup or to be shipped from the venue to any location you choose.
Also, as you may recall, as part of our 2021 Live Events Calendar, we announced that SummerSlam would be taking place for the first time from an NFL stadium, from Allegiant Stadium in Las Vegas on a Saturday night, August 21.
Saturday is a new Night for us in terms of a pay-per-view event.
Without a main event or even a card announced, we have sold over 40,000 of 45,000 tickets and we'll have a record gate for a non-WrestleMania event.
From Rolling Loud, which I previously mentioned, Bianca Belair also announced with Atlanta Hawks Superstar, Trae Young that we'll be having a New Year's Day pay-per-view this January 1, again, a Saturday from State Farm Arena in Atlanta, Georgia, Atlanta expects over 300,000 visitors for New Year's weekend.
New Year's Eve is a Friday this year.
The college football playoff championship games are on that New Year's Eve, December 31, Friday.
The NFL, which traditionally goes on Saturday nights, when the college football regular season has ended, is not going on Saturdays late season with its new 18-week regular season.
So, we saw what we think as an opening on the sports calendar and we believe ticket sales and viewership will both be indicative of that.
We look for us to announce the rest of our 2021 calendar and most of our 2022 pay-per-view calendar shortly.
Another area where we are growing and believe we will continue to grow as our sponsorship business, Stephanie and our global sales and sponsorship team have delivered over 20 new and existing sponsors so far in 2021 with many of them Blue Chip companies and executed on a number of innovative activations that really only can be done by WWE.
We're bullish on this segment and we're confident brands looking for unique ways to reach consumers will see our record of success and seek us out.
One thing to note, we announced our first ever ring announcer competition on TikTok, sponsored by Pure Life Water where anyone can submit how they would announce one of our Superstars on their ring walk.
The winners will be the ring announcers for match at SummerSlam.
So far, there have been over 9 million views of the TikTok announcement and thousands of submissions.
Stephanie will have more on sponsorship and a few other items shortly.
As we look ahead to SummerSlam, we're planning our second NFT drop leading into SummerSlam this time with John Cena.
This follows our successful NFT launch with the Undertaker of WrestleMania.
As you're all aware, NFTs trading cards, memorabilia, all incredibly popular right now.
With our wholly owned intellectual property, we are uniquely positioned to capitalize on this growing business.
Last, we announced this past Monday that we partner with Jason Blum in Blumhouse on our first scripted dramatic mini series.
The United States of America versus Vince McMahon, which will tell the story of the federal indictment of our Founder and CEO by the United States Attorney's Office in the Eastern District of New York.
The 30th anniversary of that not-guilty verdict and acquittal was just last week.
We're excited for this story to be told.
This is an exciting time for our business.
Although we don't know precisely what the future holds, the return to our live event touring positions us at an inflection point in terms of our potential fan engagement and financial performance.
As Nick mentioned, we return to live event touring with fans in attendance on July 16 for the first time in well over a year.
As a smaller side, Triple H and I went outside to greet our fans in person before doors opened at the Toyota Center in Houston and the feeling was overwhelming.
And the energy and excitement has only picked up, especially with the return of one of our biggest superstars, John Cena, kicking off what we have branded the Summer of Cena, taking us into SummerSlam.
Our partners NBCU and Fox supported our return with different campaigns airing across their respective platforms and programing.
From a production standpoint, WWE applied key learnings and techniques from producing virtual and physical television to upgrade our audio and visual experience, including the use of a 40-foot-tall by 80 foot wide state of the art curved LCD display for superstar entrances.
In addition, we are utilizing Epic's Unreal Engine 3D creation tool to generate a wide variety of augmented reality elements and surroundings, bringing our superstars to life in ways we have never done before.
Costs associated are on par with 2019 per episode costs on average and we have seen the results translate into linear viewership.
As Vince was mentioning earlier, the July 16 episode of SmackDown generated a 21% year-over-year increase in total viewers and a 42% increase in the coveted 18 to 49 demo.
Similarly, the July 19 episode of Raw generated an 8% year-over-year increase in total viewers and a 15% increase in the 18 to 49 demo.
Strong demand for live event tickets and the increase in television ratings builds upon favorable trends in key operating metrics evident in the second quarter.
TV viewership continued to remain stable, maintaining a trend that began when we transitioned out of the performance center and invested in WWE ThunderDome at the end of August.
From that time to the end of the second quarter, Raw ratings have increased modestly and SmackDown ratings have increased 7%.
Since the return of our live audience, however, Raw ratings are up 22% in the 18 to 49 demo and SmackDown ratings are up 20%.
In the quarter, digital consumption increased 5% to a quarterly record of 394 million hours and video views increased 13% to 11.2 billion as compared to a prior-year period that benefited from COVID-19 related viewing trends.
The growth included a three-time increase in Facebook hours and a two-time increase in views as viewers demonstrated interest in current and past events.
WWE is also driving value outside of our in-ring programing.
We saw solid performance for A&E's WWE biographies and Most Wanted Treasures series increasing A&E's Sunday night performance by 90% in the 18 to 49 demo and increasing total viewership by 21%.
Whether it is with Hearst Communications via A&E, Fox, Comcast, Netflix or Facebook, WWE continues to make a positive impact for our partners.
Additionally, WWE sales and sponsorship revenue increased 43% year-over-year.
As I mentioned during our last call, brands are looking for unique ways to engage with their consumers that goes well beyond generating impressions.
WWE is perfectly positioned to do just that with an ability to create customized content experiences across multiple lines of business and utilize WWE superstars that resonate with target audiences.
A recent example includes a full on zombie invasion to promote Netflix's original production's Army of the Dead as the presenting partner of WrestleMania Backlash.
The show opened with a cool video mashup of Army of the Dead and WWE storylines, narrated by WWE legend Dave Bautista who is also the star of the film, setting the tone for the night.
Zombies randomly appeared in backstage scenes and popped up as a part of the virtual audience, only to then have zombies actually surround the ring and be a part of the action when Miz faced Damian priest.
The results speak for themselves.
In addition to generating over 0.5 billion growth impressions, we saw 25 million content views across digital and social and three of the 14 trending topics from that night were directly tied to the integration.
The cultural impact and disruption during and after WrestleMania Backlash played a significant role in the film's quicker sent to becoming one of the top 10 most-watched movies in Netflix history.
Coming off the heels of our fall 2020 partnership announcement with Credit One Bank, we officially launched the WWE Championship Credit Card this past June, giving card members the opportunity to show their affinity for WWE while earning cash back rewards on everyday purchases.
Recognizing our ability to reach consumers, we recently completed a deal with Blue Triton brands, the corporate parent of Pure Life water, the official water of SummerSlam.
Pure Life is activating in multiple ways across WWE's portfolio tied to SummerSlam including sponsoring the aforementioned SummerSlam ring announcer TikTok challenge, providing product to WWE community partner events and sponsoring our summer slam after party, which we announced yesterday, will be hosted by celebrity and comedian, Tiffany Haddish in support of her foundation, the She Ready Foundation.
In the quarter, we also released our 2020 community impact report to nearly 5,000 global partners.
The report highlighted our various initiatives through the pandemic including generating 12.5 million in kind media value and over 650 million impressions for our community partners as WWE continues to deliver on our mission of putting smiles on people's faces.
In our view, WWE is well positioned to continue to elevate our brand, grow our business and engage new and existing consumers across media platforms.
Today, I'll discuss WWE's financial performance.
As a reminder, all comparisons are versus the year ago quarter unless I say otherwise.
In the second quarter, WWE generated solid financial results as we focused on driving fan engagement, strengthening our organization and increasing efficiency in our content production.
Total WWE revenue was $265.6 million, an increase of 19% reflecting the increased monetization of content across platforms, including growth from the staging of WrestleMania with ticketed fans in attendance.
Adjusted OIBDA declined 7% with $68.1 million, primarily due to higher television production expenses associated with the staging of WWE ThunderDome and to a lesser extent WrestleMania at Raymond James Stadium, both of which were produced in our performance center a year ago.
In addition, adjusted OIBDA was impacted by increased personnel expenses as our employees fully returned from furlough by the end of 2020.
Finally, during the quarter, we combine WWE's television, digital and studio teams into one organization for a more unified content strategy and more streamlined content production.
The related severance expense of $8.1 million dollars has been excluded from adjusted OIBDA as a material non-recurring item.
Looking at the WWE Media segment adjusted OIBDA was $86.2 million, a decline of 5% as increased revenue and profit from WWE's licensing agreement with Peacock and the escalation of core content rights fees were more than offset by increased production expenses.
Despite what continue to be a challenging environment, WWE produced a significant amount of content, more than 680 hours in the quarter across television, streaming and social platforms.
At the start of the quarter, we transitioned WWE's ThunderDome from Tropicana Field in St. Petersburg, Florida, Florida to the Yuengling Center in Tampa Bay.
Recall that in the second quarter of 2020, we were producing a BareBones Production out of our performance center in Orlando.
While our operating results continue to be impacted by the year-over-year increase in production expenses, associated with live streaming nearly 1,000 live virtual fans into our show, we also continue to achieve greater production efficiencies relative to our own expectations.
With the return to touring in July, we expect that production expenses for Raw and SmackDown will continue to decline on a sequential quarter basis, approximating their average per episode costs in 2019.
This is a tremendous feat from our television production team, which created the award winning ThunderDome environment using state-of-the-art technology, all while producing shows every single week throughout the pandemic with a constant eye on efficiency.
Live events adjusted OIBDA was $1.1 million, increasing $5.3 million due to an 8 times increase in revenue with the staging of WrestleMania.
This premiere event entertained ticketed fans and an audience of over 50,000.
Recall that in the year ago quarter, we staged no live events with ticketed fans.
As we have said, we are thrilled by the return of regular ticketed events.
Currently, for our announced return schedule, we anticipate ticket demand and profit per event that is least on par with 2019.
The improved performance reflects heightened consumer demand and a more analytics efficiency-oriented approach by our Live Events team in the scheduling, routing and staging of our events.
The modest decline in sales on our e-commerce site, WWE Shop, reflected a tough comparison to strong COVID-related sales in the prior year quarter.
As a reminder, in the second quarter last year and in each quarter through year-end 2020, growth in e-commerce revenue nearly offset the absence of venue merchandise revenue due to the cancellation of live events.
In previous earning calls, we have discussed how the introduction of new products such as new toys, title belts and mobile games has generated growth in WWE's Consumer Products business.
This quarter, I'd like to focus on how we're applying technology to enhance product sales.
During the quarter, we introduced a new branded app at WrestleMania for pre-ordering merchandise.
The app enables our fans to order merchandise before as well as during the event and to pick up merchandise at a specific location within the venue.
This means that at key upcoming events such as SummerSlam, we can expand the sales window and increase sales volumes without significantly increasing the number of transaction sites.
During the quarter WWE generated approximately $13 million in free cash flow, declining $54 million primarily due to the timing of collections associated with network revenue and to a lesser extent lower operating performance.
During the second quarter, WWE returned approximately $28 million of capital to shareholders including $19 million in share repurchases and $9 million in dividends paid.
To-date, more than $177 million of stock has been repurchased, representing approximately 35% of the authorization under our $500 million repurchase program.
As of June 30, 2021, WWE held approximately $443 million in cash and short-term investments.
Debt totaled $220 million including $198 million associated with WWE's convertible notes.
The company has not drawn down on its revolving line of credit and estimates relative debt capacity of approximately $200 million.
And finally, a word on WWE's business outlook.
In January, WWE issued adjusted OIBDA guidance of $270 million to $305 million for the full year 2021.
During the second quarter, key performance metrics demonstrated positive trends and we continue to realize better than expected television production efficiencies, stronger sponsorship sales and heightened demand for live events.
However, we are not adjusting full year 2021 guidance at this time given ongoing caution regarding the potential impact of COVID-19 and its variance on WWE's operations.
For the third quarter 2021, we estimate adjusted OIBDA will decline.
Incremental profits from the return to live event touring and the growth of content rights fees will be more than offset by increased television production and other operating expenses.
As a reminder, the majority of the third quarter of 2020, we remained in our performance center in Orlando, Florida, the site where we have the lowest production costs.
We did not move into WWE's ThunderDome until the end of August 2020.
So, beginning in the fourth quarter of 2021, we expect more favorable year-over-year comparisons of television production expenses, as well as sustained profit from our return to touring.
However, given the ongoing uncertainty regarding the potential impact of COVID-19 and its variants, we are not receiving more specific quarterly guidance at this time.
Finally, turning to WWE's capital expenditures.
As mentioned last quarter, we anticipate spending on the Company's new headquarters as we restart this project in the second half of 2021.
For 2021, we've estimated total capex of $85 million to $105 million to begin construction as well as to enhance WWE's production and technology infrastructure.
The increase in capital expenditures for 2021 reflects the acceleration of certain construction spends, as the overall cost of construction has not materially increased.
The total net cost of the Company's new headquarters through completion and net of tenant incentive tax credits and other capital offsets is estimated within a range of $160 million to $180 million.
In the second quarter, WWE generated solid financial results as we prepared for WWE's return to live event touring.
Positive trends in WWE's key performance metrics and expectations of sustained performance, reinforce our belief that continued innovation can enhance WWE fan engagement and drive the value of our content and products.
Please open the line.
 Assistant:

Chosen response:
compname reports q2 revenue of $265.6 mln.
q2 revenue $265.6 million versus refinitiv ibes estimate of $254.4 million.


Prompt:
Human: On the call today are Blake Krueger, our Chairman and Chief Executive Officer; Brendan Hoffman, our President; and Mike Stornant, our Senior Vice President and Chief Financial Officer.
References to underlying performance reflect the exclusion of the recently acquired Sweaty Betty brand.
These disclosures were reconciled in attached tables within the body of the release.
I hope everyone on the call is safe and well.
Consumer demand for our market-leading brands and product offerings continues to surge and exceeded our expectations in Q3.
Our strategic focus on a deeper connection with consumers, digital and DTC capabilities and product and design innovation is paying dividends.
While the supply chain challenges that have been well documented across many industries has limited our ability to fully service this growing demand in the short-term, I have never been so enthusiastic about our future and our outlook for 2022.
Earlier today, we reported over 29% revenue growth versus 2020 and 11% over 2019.
Third quarter revenue was approximately $637 million.
Earnings leverage driven by gross margin increases was very good.
We estimate that factory closures and logistics delays impacted Q3 by at least $60 million.
The Wolverine Michigan Group's revenue was up 13% year-over-year and the Wolverine Boston Group's revenue was up over 33%.
Both groups delivered growth over 2019.
Adjusted earnings per share for the company were $0.62 in line with our expectation despite the shortfall in revenue driven by macro supply chain issues.
We believe the company is well positioned to deliver accelerated future growth with a number of fundamental elements supporting our enthusiasm.
Our brand portfolio strategy and international distribution base continue to reduce risk and provide a meaningful strategic benefit in the current environment as the company is not dependent on any single product category, geographic region, consumer group or distribution channel.
While consumer lifestyle choices have increased demand for performance product, the underlying trends in this category are long-term in nature and are expected to persist.
Consumers are increasingly focused on health and wellness with running, hiking the outdoors and exercise in general, serving as the primary activation to this mindset.
Participation in running in the U.S. has increased every year over the last five years.
And a significant majority of new runners today they plan to continue running in the future.
Participation in all outdoor activities, including hiking, walking and boating has also increased with over 20 million new hikers in the U.S. alone since 2015.
This past spring and summer, National Park shattered attendance records and new boat purchases and water activities in general reached a 13-year high.
Consumers' renewed affinity for the outdoors is expected to continue into the future, especially as consumers begin to travel again.
The work category has also showed strong growth supported by healthy macro industry conditions and work wear fashion tailwinds.
Warehousing jobs have more than doubled since 2005 and construction companies are expected to hire hundreds of thousands of additional workers over the coming months.
Looking ahead, the passage of a major infrastructure plan in the U.S. will further boost momentum in this category.
Across all brands and product categories, we have placed our consumers at the heart of our global strategy, and that has changed how we bring product to market and operate the business.
This strategic focus led to our recent acquisition of Sweaty Betty, a trend right women's active wear brand that adds a very meaningful DTC business to our portfolio with over 80% of revenue generated through DTC channels.
Including Sweaty Betty, DTC e-commerce revenue more than doubled in Q3 relative to 2019 and our DTC stores are up over 35% versus that year.
Our owned online business and the online business of our wholesale customers now account for over 30% of global revenue.
Together with the DTC businesses operated by our distributor partners around the world, nearly 40% of our global revenue and a larger percentage of our payers is now generated through consumer direct channel, enabling enhanced brand shopping experiences, a wealth of consumer insights and data and a more efficient business model.
We continue to capitalize on the fundamental consumer trends that are playing out in the market.
In addition to our strong DTC business, these trends are reflected by continued strength in retail sell-through and a historically high order backlog that now extends into Q3 of 2022.
We remain bullish on our outlook in light of these trends and the composition of our brand portfolio, which over indexes in trending performance and lifestyle categories.
We expect strong long-term consumer demand, especially for Saucony, Merrell, Sweaty Betty, our work brands and Sperry, which will launch a line of products in the active sport category next spring.
For our call today, Brendan Hoffman will provide some additional insight on key brand performance during the quarter.
Mike Stornant will review our Q3 financial performance and updated outlook in more detail.
And I'll conclude with some final remarks.
With this, I'll now hand it over to Brendan.
In the third quarter, we acquired sweaty Betty, a powerhouse brand that operates in the global addressable active wear market of over $200 billion.
The brand delivers on our key strategic priorities by delivering a powerful line of industry-leading products, expanding our direct-to-consumer presence and growing our business internationally.
We plan to leverage these strengths by deploying Sweaty Betty's best practices and apparel expertise across our portfolio.
The business grew over 50% in the third quarter, ahead of our expectations.
Less than three months after welcoming Sweaty Betty to the Wolverine family, we are even more excited about the growth potential, product collaborations and operational synergies in front of us.
Saucony delivered a very strong performance in Q3 with more than 40% growth over 2020 and 60% versus 2019 despite some supply chain challenges.
saucony.com was up more than 50% and nearly tripled 2019.
The brand has seen global success with all regions contributing significant growth.
Outside of the U.S. market, technical running and lifestyle performance in Europe was especially strong, up 30% versus 2020.
Our Saucony Originals lifestyle business continues to perform well, especially internationally.
Our performance in Europe continues to accelerate, while the Asia Pacific region is a big opportunity for us moving forward with the brand delivering over 60% growth in Q3.
Saucony stores and the online business are performing well in China as the brand's joint venture there continues to gain momentum.
Saucony continues to deliver a consistent flow of powerhouse performance product and trend-right lifestyle product.
This has translated to consistent robust growth for the brand over the last several quarters, and we expect this to continue into 2022.
The road running category leads the way, including the recent launches of the new Ride 14, the brand's biggest franchise shoe and Triumph 19.
Saucony's trail running business also grew by more than 40% in the quarter.
Let me shift to Merrell.
The brand continues to experience record demand and great momentum in all global channels.
During Q3, Merrell was impacted by factory closures in Vietnam, which resulted in missed revenue opportunities of at least $25 million.
Despite these challenges, Merrell still delivered mid-single-digit growth in the quarter versus 2020.
Merrell's DTC business grew mid-single-digits in the quarter with merrell.com building on its nearly doubling of the business last year.
Merrell stores also continued to outperform our expectations, a promising indicator of the strength of the brand and the consumers return to shopping in stores.
Merrell holds the number one U.S. market share position in the hike category and is the category leader in many key markets across the globe.
While Merrell continues to successfully optimize its well established and market-leading core product franchises, fresh innovative product offerings are driving brand's heat and new consumer interest.
The Moab Speed and Moab Flight collections are energizing the performance category.
These styles represent the brand vision for fast, lightweight footwear for the trail and light hiking and also build on the heritage and success of the world's number one hiker, The Moab.
This momentum is further fueled by the uptick in organic media placements that bridge both performance and lifestyle.
For example, Annie Leibovitz used the Moab Speed in the September issue of Vogue for a major photo shoot and style with the Louis Vuitton jacket and skirt.
Additionally, Merrell was featured on The Today Show during Q3, showcasing the Moab Speed, which aligns well to the brand's Step Further campaign, encouraging increased commitment to the outdoors.
Both collections have exceeded our expectations, and we are excited about the potential for new performance collections in 2022.
Merrell's Lifestyle business performed better than the brand's overall growth in Q3.
We are seeing positive results from our strategic focus on further elevating Merrell as a lifestyle brand.
Recent brand health research indicates that consumers are incorporating Merrell into their own identity at an increasingly higher degree.
These trends are manifesting in the strong performance we are seeing in lifestyle product, including the Hydro Moc and the newly launched Cloud all-day casual sneaker collection made with eco-friendly materials.
As we mentioned on our Q2 call, Merrell introduced its 1TRL capsule collection on merrell.com, which focuses on younger, fashion-forward consumers demanding authentic outdoor influenced style.
Looking ahead, Merrell possesses a substantial growth opportunity globally, particularly in EMEA, which has seen increasing momentum for several quarters, and in Asia Pacific where the China JV is just beginning to gain momentum.
Outdoor and performance trends are strong around the world, and Merrell is capitalizing on its heritage and brand positioning.
In Q3, our work business accounted for nearly 20% of total revenue and the category continued to deliver strong growth with Wolverine, the leader in the U.S. work boot category, up over 16%, Cat Footwear, up nearly 40% and with strong contributions from our smaller brands.
As Blake indicated, we expect continued strong growth in the work category as we pivot toward 2022.
Based on the performance of Merrell, Saucony, Sweaty Betty, Wolverine and our other work brands, our performance business developed growth of nearly 30% over 2019 during the third quarter.
The Sperry brand continued its steady recovery in Q3 with over 40% growth.
The brand's DTC business was up 25% driven by ongoing e-commerce growth and very good Sperry stores performance.
All product categories delivered strong double-digit increases in the quarter.
The overall boat market showed strong growth, particularly in men's, and Sperry gained significant market share growth in this key category.
From a fashion standpoint, there are clear indications that we are at the forefront of a boat shoe trend with very encouraging demand from key retailers for the first half of 2022.
I hope you all saw 007 James Bond wearing a pair of our iconic boat shoes in No Time To Die.
In the coming months, Sperry plans to build on the energy created by recent collaborations with Rowing Blazers and Netflix Outer Banks and product capsules with John Legend and Rebecca Minkoff.
The brand is also well positioned for the current seasonal women's boot business with strong demand and healthy inventory levels.
Sperry will also leverage the easy on-off trend during Q4 with the new Moc Sider and the Cozy Float collections.
In Spring '22, the brand will launch its new Sperry Sport collection through a path into macro consumer trends with more trend-right performance-based product for the water.
Looking forward, our product lines are robust across the brand portfolio and order demand continues to strengthen.
We have been flexible and responded quickly to navigate the ongoing macro supply chain challenges to service the increased demand we are seeing in nearly every brand.
We believe strong product coupled with more precise merchandising and consumer focus as well as healthier inventory positions will drive growth over the next year.
Our DTC channels remain a top priority and a source of opportunity for the business.
We have pivoted to a more dynamic e-commerce operating model to enable faster implementation of technical enhancements and new commercial capabilities, which will also help us extend improved online functionality to our global online wholesale customers.
In addition to our global DTC e-commerce business, we are seeing meaningful wholesale growth with our online retail customers.
As global economies have reopened, we have seen consumers shift a portion of their spending back to brick and mortar stores.
About 50% of our footwear is now sold online in the important U.S. market.
This bodes well for the current brand operating model that we are executing, including a more continuous product flow and best-in-class digital marketing content to benefit all channels.
We continue to look closely at our store fleet and suspect there may be favorable and profitable opportunities for us to explore as we expand our footprint in key markets starting in 2022.
I'm now going to hand it off to Mike to review the third quarter financial results and our increased 2021 outlook in more detail.
Let me start by reviewing the company's strong third quarter financial performance, and then I'll cover our revised outlook for 2021.
Third quarter revenue of approximately $637 million represents growth of over 29% compared to the prior year and includes $39 million from the recently acquired Sweaty Betty business.
On a pro forma basis, Sweaty Betty grew over 50% versus 2020.
Based on increased consumer demand experienced across the portfolio during the quarter, the company was on track to deliver just under $700 million in third quarter revenue.
But as Blake mentioned, the unprecedented factory closures and other well documented supply chain disruption impeded our ability to service this strong demand.
Despite these headwinds, Saucony and Sperry each delivered over 40% growth.
Merrell was impacted most heavily by the factory closures in Southern Vietnam, yet still delivered mid-single-digit growth.
Our work business also continued to drive meaningful growth at over 20%.
Adjusted gross margin improved 330 basis points versus the prior year to 44.6% due to the higher average selling prices, favorable product mix and the addition of Sweaty Betty for nearly two months of the quarter.
Merrell, Saucony and Sperry all well exceeded gross margin expectations in the quarter, a testament to their strong position in the marketplace and robust pipeline of relevant trend-right product.
Sweaty Betty's premium positioning, distinctive product offering and strong consumer trends are yielding robust gross margins which are accretive to our underlying business in Q3.
Total air freight costs were approximately $10 million in the quarter, of which $7 million was excluded from our adjusted results.
Including the full air freight impact, our adjusted gross margin would have been 43.5% still 220 basis points higher than last year.
We continue to use air freight where appropriate to mitigate exceptional supply chain delays caused specifically by COVID.
Adjusted selling, general and administrative expenses of approximately $208 million were $56 million more than last year, primarily due to increased revenue, the addition of Sweaty Betty and increased marketing investments.
Adjusted operating margin was 12% for Q3, an improvement of 140 basis points over last year and ahead of our expectations.
This very strong leverage on the company's revenue growth resulted from gross margin expansion and a balanced operating expense management.
Adjusted diluted earnings per share were $0.62 compared to $0.35 in the prior year, growth of 77% or 3.5 times our revenue growth in the quarter.
Reported diluted earnings per share were breakeven and include a number of non-recurring or exceptional items comprised of approximately $34 million of cost related to bond retirements executed in the quarter to significantly improve the company's capital structure and future liquidity, including future savings of nearly $10 million in annual interest expense.
Approximately $10 million of cost directly related to the acquisition of Sweaty Betty.
Approximately $17 million of costs related to our legacy environmental matters.
Including ongoing defense costs and an estimate of potential future settlement costs for a portion of the outstanding litigation.
And finally, approximately $7 million of air freight considered to be well above normalized levels based on historical experience.
During the quarter, the company and 3M entered into a non-binding term sheet outlining proposed settlement terms on certain individual lawsuits filed against the company related to our legacy environmental issue.
While the proposed settlement remains subject to finalizing terms and contingencies that allow any of the parties to opt out of the proposed settlement, we believe this is another important step toward potential resolution of these matters.
Let me now shift to the balance sheet.
Total inventory grew approximately 26% versus 2020, including 16 percentage points of growth from Sweaty Betty.
Underlying inventory was up approximately 10% compared to last year and still down compared to 2019.
Our inventory position has improved over the last two quarters, especially for Saucony, Sperry and our work brands, but is still not in line with the higher demand.
Merrell continues to manage through the recovery from closed Vietnam factories which has put more pressure on inventory levels.
Based on current visibility, inventory levels will continue to improve as we benefit from supply chain diversification, the addition of several new factories and incremental capacity for 2022, higher production orders placed in mid-2021 and other actions we have taken to counterbalance macro supply chain headwinds.
Since August 1, we acquired Sweaty Betty for approximately $410 million.
The purchase was financed through a combination of existing cash and borrowing under the company's revolver.
We also executed some important refinancing activities to support future growth and optimize our capital structure, most notably, a bond refinancing and a new credit facility that gives us added liquidity and flexibility to invest in growth.
As a result of these recent actions, we've added a powerhouse growth brand to the portfolio and our balance sheet remains extremely healthy with total liquidity of approximately $800 million.
I will now provide an update on our outlook for the rest of 2021.
First let me focus on the strength of demand signals across the portfolio that support a very optimistic outlook for growth over the next several quarters.
Our order book remains at historically high levels and provides very clear demand visibility for our global wholesale and distributor businesses well into 2022.
Retail sell through continues to be very strong.
Despite shipment delays and supply chain disruption, our order cancellations have been limited as retailers remain committed to our industry-leading brands and product offerings.
The positive momentum of our performance and work footwear brands continues, and now Sperry is beginning to show signs of a healthy recovery.
Sweaty Betty is now the fourth largest brand in our portfolio and is driving outpaced growth.
Trends in our DTC business remains strong with year-to-date underlying e-commerce revenue up nearly double 2019 and year-to-date underlying store revenue up mid-teens.
Finally, demand in our APAC and Latin America regions is recovering nicely as we transition to spring 2022, and we see near-term strength across many international markets.
All of these indicators give us great confidence for the future.
The strength of new product offerings and improved go to market tactics across the portfolio will allow us to continue to fuel growth despite the macro supply chain headwinds that we believe will persist well into 2022.
In the short-term, the impact of factory closures and a volatile logistics environment is having an unplanned negative impact on revenue for the last four months of 2021.
As a result, we are adjusting our fiscal 2021 outlook.
We now expect fiscal 2021 revenue of approximately $2.4 billion, growth of nearly 35% compared to the prior year and approximately 28% growth on an underlying basis.
Despite the shorter term supply chain impact, we still expect to deliver up to 25% growth in the fourth quarter.
There will be ongoing cost pressure related to higher freight and logistics costs throughout the fourth quarter, and we will continue to invest behind our future growth opportunities, including brand enhancing marketing and key talent.
We now expect full year adjusted diluted earnings per share in the range of $2.05 to $2.10 and Q4 adjusted diluted earnings per share of $0.38 to $0.43, representing 100% growth over 2020 at the high end of that range.
Full year reported diluted earnings per share are now expected in the range of $1.16 to $1.21.
We have good line of sight to the start of 2022 and have great enthusiasm for continued brand momentum as we pivot into the New Year.
While certain known supply chain headwinds will continue to be in play, we still expect to deliver mid-teens underlying growth and mid-20s overall growth in the first quarter of 2022.
Our confidence in delivering double-digit underlying growth next year remains very high, and we believe Sweaty Betty adds significantly to the growth profile of the company.
With that, I will hand it back over to Blake for some closing remarks.
Our healthy growth and strong financial performance in Q3 are a testament to the company's strategic focus and accelerated brand investments.
Over the last several years, we've consistently invested behind digital and DTC capabilities, technology, talent and the e-commerce as well as product innovation and design.
In Q3, we made an important acquisition of Sweaty Betty, which will be an important catalyst for growth across our performance brands.
Our product pipeline is robust, consumer demand is surging and brand heat and ongoing trends favor our brand.
We are confident as we plan for double-digit growth in 2022.
The advantageous position we find ourselves in today is a credit to our team's expertise and relentless work, especially over the last couple of years.
Global marketplace continues to be dynamic and fast changing and our people and company are excelling in this environment.
 Assistant:

Chosen response:
wolverine world wide sees fy21 adjusted earnings per share to be in range of $2.05 to $2.10.
sees fy21 adjusted earnings per share to be in range of $2.05 to $2.10 .
sees fy revenue up 35 percent.
sees fy revenue about $2.4 billion.
quarterly adjusted earnings per share $0.62.
sees fy21 diluted earnings per share to be in range of $1.16 to $1.21.
sees fy21 adjusted to be in range of $2.05 to $2.10.