Warner Bros. Discovery Reports Q1 Loss Amid Revenue Decline

Warner Bros. Discovery (WBD) reported a loss of 18 cents per share for the first quarter of 2025, falling short of the Zacks Consensus Estimate by 50%. This reflects an improvement from the loss of 40 cents recorded in the same quarter last year.

Revenues fell by 10% year over year to $8.98 billion, missing the Zacks Consensus Estimate by 7.34%. Excluding foreign exchange effects, revenues decreased by 9% year over year.

Breaking down the revenue streams, advertising revenues dropped by 8% to $1.98 billion. Distribution revenues were down 2%, totaling $4.89 billion. Meanwhile, content revenues saw a significant decline of 27%, falling to $1.87 billion. Other revenues stood at $247 million, a decrease of 7% from the previous year’s quarter.

In the Streaming & Studios segment, revenues amounted to $4.35 billion, reflecting a 12% year-over-year decline. Global Linear Networks’ revenues also suffered, decreasing by 7% to $4.77 billion.

Financial Overview and Subscriber Growth

At the end of Q1 2025, WBD reported 122.3 million total subscribers across Max, HBO Max, HBO, and Discovery+, marking an increase of 5.3 million since the last quarter. The global average revenue per user (ARPU) was recorded at $7.11, down from $7.44 in the previous quarter and $7.83 a year ago.

Despite a recent uptick of 2.63% in share price, WBD shares have declined by 16.7% year-to-date, underperforming peers like Paramount Global (PARA), Disney (DIS), and Netflix (NFLX). In comparison, Disney shares fell by 6.3%, while Paramount and Netflix saw increases of 10.2% and 28%, respectively.

Following the Q1 results, WBD’s subscriber count still trails behind Disney+, which had 126 million subscribers as of March 29, 2025.

Detailed Breakdown of Q1 Revenues

Streaming revenues totaled $2.66 billion, an 8% increase compared to last year. However, Studios revenues fell by 18% to $2.31 billion.

Within the Streaming segment, subscriber-related revenues rose by 9% year over year, reaching $2.57 billion. Content revenues decreased by 11% to $88 million. Other revenues were minimal, reported as $2 million. Additionally, Streaming Distribution revenues went up by 7% to $2.33 billion, while Streaming Advertising revenues surged by 35% to $237 million.

In the Studios segment, Distribution revenues dropped dramatically by 80% to $1 million, with Streaming Advertising revenues also down 75% to $1 million. Content revenues fell by 18% to $2.14 billion, and other revenues declined by 8% to $173 million.

For Global Linear Networks, Distribution revenues decreased by 9% to $2.56 billion, and Advertising revenues fell 12% to $1.76 billion. Notably, Content revenues increased by 44% to $380 million, while other revenues edged up by 1% to $78 million.

WBD’s adjusted EBITDA for Q1 2025 was $2.1 billion, showing a 4% improvement over the previous year.

Cash Flow and Balance Sheet Status

As of March 31, 2025, WBD had cash and cash equivalents totaling $3.89 billion, down from $5.31 billion as of December 30, 2024. The company reported that its $6 billion revolving credit facility remained undrawn.

At the close of Q1 2025, Warner Bros. Discovery held $38 billion in gross debt with a net leverage ratio of 3.8x. The company repaid $2.2 billion of its debt during the quarter.

Zacks Rank and Future Earnings Estimate

Currently, Warner Bros. Discovery holds a Zacks Rank of #4 (Sell). The Zacks Consensus Estimate for the second quarter of 2025 anticipates a loss of 19 cents per share, reflecting a three-cent widening over the past 30 days.