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Wanda Sports Group saw the value of its shares drop by more than 14 per cent this week after it reported net losses of €31.2 million (US$34 million) for the third quarter of 2019.
Shares in the Beijing-based, Nasdaq-listed company, which owns and manages media and marketing rights to a host of major sports events, fell to US$2.78 on Monday following news of the losses, which compare to profits of €13.1 million (US$14.5 million) for the same period in 2018.
Wanda Sports’ shares have lost nearly 60 per cent of their value since the company raised US$190 million in its initial public offering (IPO) in July. Since then, several law firms in the US have claimed the firm misled investors by releasing ‘materially false' business information, and at least one, Bragar Eagel & Squire, P.C., has now filed a class action lawsuit.
Launched last year, Wanda Sports – the sports unit of Chinese conglomerate Dalian Wanda Group – has more than 60 offices and 1,600 employees worldwide. Its holdings include the marketing agency Infront Sports & Media and the World Triathlon Corporation, which owns the Ironman group of endurance events.
The company operates across three core business segments: Mass Participation, which comprises triathlon, running and cycling events; Spectator Sports, which manages a number of world championships and large-scale regional events; and Digital, Production, Sports Solutions (DPSS).
In the three months ending 30th September, the company’s total revenue rose to €245.2 million (US$267.4 million), an eight per cent year-over-year increase attributed to marked growth in its Mass Participation and Spectator Sports segments.
The Mass Participation segment alone generated €113.4 million (US$123.7 million), or 46 per cent of overall revenue. Spectator Sports contributed 43 per cent of the total, generating €105.8 million (US$115.4 million). Those figures represented a 14 per cent and 80 per cent uplift on the previous year respectively.
The increase in Spectator Sports revenue was primarily due to the expansion of the company’s summer sports portfolio, which included the Fiba Basketball World Cup 2019, FIM MXGP Motocross World Championship races, and the CEV EuroVolley 2019.
Adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) was €39.3 million (US$42.8 million) for the quarter, similar to the same period in 2018. In a statement, the company put its Q3 losses down to ‘stock-based compensation expenses, the remaining IPO-related costs and the financing costs’.
“We delivered solid operating results in the third quarter driven by the strong activity in our Spectator Sports segment, the addition of popular new events in our Mass Participation segment and our continued ability to leverage technology across our global platform to deliver a differentiated experience for our athletes, fans and partners,” said Hengming Yang, Wanda Sports’ chief executive.
“However, our near-term profitability has been impacted by the expenses in stock-based compensation, the remaining IPO-related costs and the financing costs, as we have previously mentioned. Notwithstanding these factors, we remain confident in the outlook of our business and our ability to continue to execute our strategy to create lasting shareholder value.”
In the third quarter of 2019, Wanda Sports organised 120 mass participation events, up from 102 in the same period last year. It also established a wide-ranging, long-term strategic partnership with World Athletics, as well as extending its deal with the International Ice Hockey Federation (IIHF) and delivering host broadcast operations for the Fifa Women's World Cup and Rugby World Cup.
“Despite the cyclicality, we have delivered robust like-for-like revenue growth year-on-year, thanks to the expansion of our sports rights and event offerings in the third quarter,” said Brian Liao, the company’s chief financial officer.
“Our focus remains on reducing our debt, improving synergies across our group and taking full advantage of our asset light model and strong cash flow generation as we position Wanda Sports for long-term growth.”
Editor's note: A previous version of this article mentioned that Wanda Sports Group had faced class action lawsuits in the US, which is not correct.
Wanda Sports Group saw the value of its shares drop by more than 14 per cent this week after it reported net losses of €31.2 million (US$34 million) for the third quarter of 2019
Wanda Sports Group saw the value of its shares drop by more than 14 per cent this week after it reported net losses of €31.2 million (US$34 million) for the third quarter of 2019.
Shares in the Beijing-based, Nasdaq-listed company, which owns and manages media and marketing rights to a host of major sports events, fell to US$2.78 on Monday following news of the losses, which compare to profits of €13.1 million (US$14.5 million) for the same period in 2018.
Wanda Sports’ shares have lost nearly 60 per cent of their value since the company raised US$190 million in its initial public offering (IPO) in July. Since then, it has faced class action lawsuits in the US, where litigators claim the firm misled investors by releasing ‘materially false' business information.
Launched last year, Wanda Sports – the sports unit of Chinese conglomerate Dalian Wanda Group – has more than 60 offices and 1,600 employees worldwide. Its holdings include the marketing agency Infront Sports & Media and the World Triathlon Corporation, which owns the Ironman group of endurance events.
The company operates across three core business segments: Mass Participation, which comprises triathlon, running and cycling events; Spectator Sports, which manages a number of world championships and large-scale regional events; and Digital, Production, Sports Solutions (DPSS).
In the three months ending 30th September, the company’s total revenue rose to €245.2 million (US$267.4 million), an eight per cent year-over-year increase attributed to marked growth in its Mass Participation and Spectator Sports segments.
The Mass Participation segment alone generated €113.4 million (US$123.7 million), or 46 per cent of overall revenue. Spectator Sports contributed 43 per cent of the total, generating €105.8 million (US$115.4 million). Those figures represented a 14 per cent and 80 per cent uplift on the previous year respectively.
The increase in Spectator Sports revenue was primarily due to the expansion of the company’s summer sports portfolio, which included the Fiba Basketball World Cup 2019, FIM MXGP Motocross World Championship races, and the CEV EuroVolley 2019.
Adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) was €39.3 million (US$42.8 million) for the quarter, similar to the same period in 2018. In a statement, the company put its Q3 losses down to ‘stock-based compensation expenses, the remaining IPO-related costs and the financing costs’.
“We delivered solid operating results in the third quarter driven by the strong activity in our Spectator Sports segment, the addition of popular new events in our Mass Participation segment and our continued ability to leverage technology across our global platform to deliver a differentiated experience for our athletes, fans and partners,” said Hengming Yang, Wanda Sports’ chief executive.
“However, our near-term profitability has been impacted by the expenses in stock-based compensation, the remaining IPO-related costs and the financing costs, as we have previously mentioned. Notwithstanding these factors, we remain confident in the outlook of our business and our ability to continue to execute our strategy to create lasting shareholder value.”
In the third quarter of 2019, Wanda Sports organised 120 mass participation events, up from 102 in the same period last year. It also established a wide-ranging, long-term strategic partnership with World Athletics, as well as extending its deal with the International Ice Hockey Federation (IIHF) and delivering host broadcast operations for the Fifa Women's World Cup and Rugby World Cup.
“Despite the cyclicality, we have delivered robust like-for-like revenue growth year-on-year, thanks to the expansion of our sports rights and event offerings in the third quarter,” said Brian Liao, the company’s chief financial officer.
“Our focus remains on reducing our debt, improving synergies across our group and taking full advantage of our asset light model and strong cash flow generation as we position Wanda Sports for long-term growth.”
