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Warner Bros. Discovery, Inc. (WBD) Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue declined to $8.98B, driven by weaker Studios content and linear advertising; Adjusted EBITDA was $2.11B, up 4% ex-FX YoY, while net loss improved to $(0.45)B .
  • Streaming delivered 5.3M net subscriber adds to 122.3M, with Adjusted EBITDA of $0.34B; Global Linear Networks remained the profit engine (Adj. EBITDA $1.79B) despite audience declines; Studios profits improved sequentially on cost reductions .
  • Against S&P Global consensus, WBD missed Q1 2025 revenue ($9.59B* est vs $8.98B actual) and EPS (−$0.12* est vs −$0.18 actual); note consensus “EBITDA” is not comparable to WBD’s Adjusted EBITDA ($2.11B) and showed an apparent miss on the S&P EBITDA definition* .
  • Guidance and narrative catalysts: management reiterated Streaming Adjusted EBITDA of at least $1.3B in 2025 and a path to 150M+ subscribers by end-2026; near-term linear advertising headwind expected in Q2 (≈−2% YoY) from sports mix; 2025 sports rights cost overlap ≈$300M, reversing in 2026 .

Values retrieved from S&P Global*

What Went Well and What Went Wrong

What Went Well

  • Streaming momentum: “Over the last 12 months, we have gained more than 22 million subscribers… and delivered $339 million in EBITDA. We are firmly on track to deliver at least $1.3 billion of EBITDA in 2025” — CEO David Zaslav .
  • Studios profitability improved: Studios Adjusted EBITDA rose to $259M (+63% ex-FX YoY) with material reductions in costs, even with lighter theatrical slate .
  • Balance sheet progress: WBD repaid $2.2B of debt; ended Q1 with $4.0B cash and 3.8x net leverage; average debt cost 4.7% and maturity 13.9 years .

What Went Wrong

  • Content revenue down 25% ex-FX YoY on tough comps (Dune: Part Two, Godzilla x Kong, Wonka/Aquaman in prior periods) and no Games releases; total revenue down 9% ex-FX YoY .
  • Linear pressures: domestic linear audience declined 27%, advertising down 11% ex-FX in Global Linear Networks; distribution fell on subscriber declines .
  • ARPU declined: global streaming ARPU fell 9% ex-FX to $7.11 on mix shift to lower-ARPU international, and domestic ARPU fell 5% to $11.15 on broader wholesale distribution of Max Basic with Ads .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$9.62 $10.03 $8.98
Net Income (Loss) ($USD Billions)$0.14 $(0.49) $(0.45)
Diluted EPS ($USD)$0.05 $(0.20) $(0.18)
Adjusted EBITDA ($USD Billions)$2.41 $2.72 $2.11
EBITDA Margin %23.53%*24.03%*19.69%*
Cash from Operations ($USD Billions)$0.85 $2.72 $0.55
Free Cash Flow ($USD Billions)$0.63 $2.43 $0.30

Values retrieved from S&P Global* (for margin)

Actual vs S&P Global Consensus (Q1 2025)

MetricConsensusActual
Revenue ($USD Billions)$9.59*$8.98
Primary EPS ($USD)−$0.12*−$0.18

Values retrieved from S&P Global*
Note: S&P Global “EBITDA Consensus Mean” ($2.08B*) is not directly comparable to WBD’s non-GAAP Adjusted EBITDA ($2.11B) . Consensus “actual EBITDA” reported by S&P was $1.77B*; use caution given definitional differences.*

Segment Breakdown (Q1 2025)

SegmentRevenue ($USD Millions)YoY % (ex-FX)Adjusted EBITDA ($USD Millions)YoY % (ex-FX)
Streaming2,656 +9% 339 NM
Studios2,314 −16% 259 +63%
Global Linear Networks4,774 −6% 1,793 −14%
Inter-segment & Corporate(142) NM(53) NM

KPIs (Streaming)

KPIQ3 2024Q4 2024Q1 2025
Global Subscribers (Millions)110.5 116.9 122.3
Global ARPU ($USD)$7.84 $7.44 $7.11
Domestic Subscribers (Millions)52.6 57.1 57.6
Domestic ARPU ($USD)$11.99 $11.77 $11.15
International Subscribers (Millions)57.9 59.8 64.6
International ARPU ($USD)$4.05 $3.74 $3.63

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Streaming Adjusted EBITDAFY 2025“≈$1.3B” “At least $1.3B” Maintained/affirmed
Streaming SubscribersEnd-2026“≥150M by end-2026” Reaffirmed “surpass 150M by end-2026” Maintained
Global Linear Networks AdvertisingQ2 2025Not previously quantifiedQ2 ad revenue headwind ≈−2% YoY (Final Four absence; partial offset Stanley Cup Finals) New
Sports Rights Costs (Overlap)FY 2025Directional overlap noted Model ≈+$300M cost increase; Q2 most pronounced; modest headwind in Q3; tailwind starts Q4 Clarified/quantified
Sports Rights Expense Savings (NBA exit)FY 2026“Several hundred million” net savings Reiterated “few hundred million” improvement vs 2025 Maintained
Leverage TargetMedium termGross leverage 2.5–3.0x Reiterated Maintained

Earnings Call Themes & Trends

TopicQ3 2024 (Prev-2)Q4 2024 (Prev-1)Q1 2025 (Current)Trend
DTC profitability & scaleTurning point: $289M EBITDA; strong sub adds; bundling highlighted DTC EBITDA ≈$700M in 2024; expect ≈$1.3B in 2025; path to 150M subs by end-2026 “Firmly on track” for ≥$1.3B; 5.3M net adds in Q1; multi-lever growth (globalization, ARPU via ad-lite, product) Strengthening
Bundling strategyDisney/Hulu bundle as compelling; more deals internationally Emphasis on bundles for better consumer experience and lower churn Continued push; soft/hard bundles with penetration commitments in some markets Expanding
Sports rights strategyOlympics impact and portfolio optimization NBA exit overlap hurts 2025; better in 2026; disciplined approach “Sports is rental”; focus on owned IP; $300M 2025 overlap; 2026 improvement Transition year; tailwind next year
Studios $3B EBITDA ambitionAcknowledged hit/miss; Games impairment pressure Expect significant step toward $3B in 2025; balanced slate Studios EBITDA +63% ex-FX YoY; focus on franchise/IP and TV strength Improving
ARPU evolutionAd-lite rollouts and lower ARPU in int’l markets ARPU under pressure near-term; ad monetization ramp expected ARPU declines (global −9% ex-FX); levers: pricing, password sharing/extra member, sports upsell Near-term pressure; medium-term recovery
Corporate structure & optionalityTransparency initiatives Reorg effective Jan 1; visibility for Streaming & Studios vs Global Linear Networks Optionality emphasized; potential for future actions if value-accretive Optionality increasing
Macro & tariffsN/ALinear ad market weaker than expected No material impact seen; cost prudence after tariff announcements Watchful stance

Management Commentary

  • “It’s not how much, it’s how good… our commitment to high-quality storytelling… shows up in our bottom line.” — David Zaslav, CEO .
  • “We are firmly on track to deliver at least $1.3 billion of [Streaming] EBITDA in 2025… and to surpass our 150 million subscriber goal by the end of next year.” — David Zaslav .
  • “Sports is a rental business. For us, Superman, Batman, DC, Harry Potter, Lord of the Rings… we own those assets.” — David Zaslav .
  • “Okay to model a roughly $300 million cost increase in 2025 [sports rights overlap]… Q2 big part; improvement starts in Q4; very significant step down in 2026.” — Gunnar Wiedenfels, CFO .
  • “We’re experimenting with sports/news models globally… balancing acquisition and engagement with profitability.” — JB Perrette, CEO Global Streaming & Games .

Q&A Highlights

  • Capital structure/optionality: Management completed reorg to enhance flexibility and transparency; avoids speculating on future capital structures but underscores readiness for opportunities .
  • Extra member add-on & password sharing: U.S. retail-only initial rollout; benefits ramp over 12–18 months as messaging gets firmer and globalizes into 2026 .
  • Linear advertising & upfronts: Q2 tracking in line with Q1 (adjusted for sports mix); upfronts slower but scatter stronger; cost actions taken post-tariffs; corporate costs trending lower YoY .
  • Sports portfolio economics: 2025 overlap adds ≈$300M cost; affiliate renewals successful even without NBA; 2026 net expense “few hundred million” lower vs 2025 .
  • ARPU drivers: ad-lite expansion, pricing, password-sharing controls, sports upsell; manage to LTV/SAC over ARPU optics .

Estimates Context

  • Q1 2025 revenue and EPS missed S&P Global consensus (Revenue $9.59B* est vs $8.98B actual; EPS −$0.12* est vs −$0.18 actual) .
  • EBITDA comparability: WBD reports non-GAAP Adjusted EBITDA of $2.11B ; S&P Global’s “EBITDA” consensus/actual uses a different definition and showed $2.08B* est and $1.77B* actual — use caution when comparing to WBD’s Adjusted EBITDA.*
  • Implications: Consensus likely revises linear advertising and Studios trajectories to reflect continued ARPU pressure (mix) and content timing; Streaming trajectory remains positive given reiterated ≥$1.3B 2025 Adjusted EBITDA and multi-lever growth .

Values retrieved from S&P Global*

Key Takeaways for Investors

  • Streaming is the growth engine: 5.3M net adds and $339M Adjusted EBITDA in Q1; ≥$1.3B 2025 target reaffirmed; watch globalization pace, ad monetization, and password-sharing enforcement as catalysts .
  • Linear remains cash generative but pressured: expect Q2 ad headwind (≈−2% YoY) and higher sports costs; affiliate rate increases secured, with improved structures supporting ecosystem longevity .
  • Studios profitability improving: cost discipline and TV strength drove +63% ex-FX EBITDA; slate and licensing availability should support sequential improvement through 2025 .
  • 2025 is a transition year for sports costs; 2026 should benefit materially from NBA exit, delivering a “few hundred million” expense improvement vs 2025 .
  • Balance sheet de-risking continues: $2.2B debt repaid in Q1; 3.8x net leverage; reiterated 2.5–3x gross leverage target — ongoing FCF prioritization to debt reduction .
  • Near-term stock narrative hinges on: execution on streaming ARPU levers, stability in linear ad trends, visibility to Studios cadence, and delivery on sports cost inflection into 2026 .
  • Valuation catalysts: incremental hard bundles, content tentpoles (Superman), ad-lite scaling across >45 markets, and improved licensing availability can drive estimate revisions upward in H2’25/H1’26 .

Notes: Values retrieved from S&P Global* where marked with an asterisk.

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