Sign in

Warner Bros. Discovery, Inc. (WBD) Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue was $9.05B, down 6% YoY ex-FX; excluding the 2024 Olympics impact, consolidated revenue was flat ex-FX. Adjusted EBITDA rose 2% YoY to $2.47B on strength in Streaming and Studios, partially offset by Global Linear Networks weakness .
  • EPS of -$0.06 missed S&P Global consensus (-$0.052*) and revenue of $9.05B missed consensus ($9.18B*); Adjusted EBITDA outperformed company-internal momentum but “EBITDA” vs consensus is not perfectly comparable due to definitional differences .
  • Studios delivered a strong quarter (revenues +24% YoY; Adjusted EBITDA +$387M YoY), driven by theatrical outperformance (Superman, The Conjuring: Last Rites, Weapons) and content licensing .
  • Streaming added 2.3M net subs to 128.0M; ARPU declined on mix and a domestic distribution renewal with a former related party; management reiterated Streaming ≥$1.3B FY25 Adj. EBITDA and expects distribution revenue to reaccelerate 1H26 with EU launches and U.S. price actions .
  • Near-term headwinds: absence of NBA expected to reduce Q4 Streaming ad revenues by ~300 bps and Global Linear Networks ad revenues by ~400 bps; marketing spend ahead of Germany/Italy launches will pressure Q4 segment margins .

What Went Well and What Went Wrong

What Went Well

  • Studios strength: “Studios Adjusted EBITDA was $695 million, a $387 million increase compared to the prior year quarter,” with theatrical revenue +74% ex-FX driven by Superman and horror slate .
  • Scale in streaming: “Global streaming subscribers were 128.0 million, an increase of 2.3 million… vs. Q2,” and Streaming Adjusted EBITDA +24% ex-FX to $345M .
  • Debt reduction and liquidity: Repaid $1.2B debt (including $1.0B bridge loan); ended Q3 with $4.3B cash, $34.5B gross debt, and 3.3x net leverage .
  • CEO tone: “We’re delivering on our promise, and Warner Bros. Discovery is back. Global and stronger than ever” .
  • DC relaunch momentum: “Superman… marked a new era… building on Superman’s foundation… upcoming projects include Lanterns… Supergirl and Clayface” .

What Went Wrong

  • Linear advertising and distribution weakness: Global Linear Networks revenues -22% YoY; advertising -21% ex-FX on domestic audience declines and Olympics comp; distribution -8% ex-FX .
  • ARPU pressure: Global ARPU fell to $6.64, domestic ARPU to $10.40, impacted by mix shift, legal ruling adjustments, and the domestic distribution renewal .
  • Content revenue declines in Streaming (-27% ex-FX) due to lower third-party licensing as HBO Max expands globally .
  • Consolidated net loss of $148M reflecting $1.3B pre-tax acquisition-related amortization of intangibles, content fair value step-up, and restructuring expenses .

Financial Results

Consolidated Summary (company-reported)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$8.979 $9.812 $9.045
Net Income ($USD Billions)-$0.453 $1.580 -$0.148
Diluted EPS ($)-$0.18 $0.63 -$0.06
Operating Income ($USD Billions)-$0.037 -$0.185 $0.611
Adjusted EBITDA ($USD Billions)$2.105 $1.953 $2.470
Adjusted EBITDA Margin (%)23.4% 19.9% 27.3%

Note: Adjusted EBITDA margins are derived from company-reported Adjusted EBITDA divided by Total Revenues for each period .

Year-over-Year (Q3 2025 vs Q3 2024)

MetricQ3 2024Q3 2025YoY Change
Revenue ($USD Billions)$9.623 $9.045 -6%
Net Income ($USD Billions)$0.135 -$0.148 NM
Adjusted EBITDA ($USD Billions)$2.413 $2.470 +2%

Segment Breakdown (Q3 2025)

SegmentRevenues ($USD Billions)YoYAdjusted EBITDA ($USD Billions)YoY
Streaming$2.633 0% $0.345 +19%
Studios$3.321 +24% $0.695 NM
Global Linear Networks$3.883 -22% $1.702 -20%
Eliminations/Corporate/Other$(0.792) revenue eliminations; Corporate Adj. EBITDA $(0.258) —$(0.258) +13%

KPIs (Streaming)

KPIQ1 2025Q2 2025Q3 2025
Global Subscribers (M)122.3 125.7 128.0
Domestic Subscribers (M)57.6 57.8 58.0
International Subscribers (M)64.6 67.9 70.0
Global ARPU ($)$7.11 $7.14 $6.64
Domestic ARPU ($)$11.15 $11.16 $10.40
International ARPU ($)$3.63 $3.85 $3.70

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Streaming Adjusted EBITDAFY 2025≥$1.3B ≥$1.3B reaffirmed Maintained
Studios Adjusted EBITDAFY 2025≥$2.4B “Meaningfully exceed” prior ≥$2.4B; target ≥$3.0B longer-term Raised qualitative (above prior)
Global Streaming SubscribersYE 2026≥150M ≥150M reaffirmed; EU launches (DE/IT Q1 2026; UK/IE Q2 2026) Maintained with timing detail
Streaming Distribution Revenue GrowthQ4 2025Low single digits (implied) Low single digits; reacceleration expected 1H26 Maintained; near-term trajectory clarified
Streaming Advertising RevenueQ4 2025N/A~300 bps negative impact from absence of NBA New headwind
Global Linear Advertising RevenueQ4 2025N/A~400 bps negative impact from absence of NBA New headwind
Interest Expense Run-Rate2H 2025~+$80M QoQ increase due to bridge facility Reiterated bridge facility impact Maintained
Near-term Marketing CostsQ4 2025N/AModest upfront costs ahead of DE/IT launches New cost timing disclosure

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Studios profitability and slateTarget ≥$3B Studios Adj. EBITDA; strong Q2 slate (Minecraft, Sinners, F1) Superman and horror slate drive theatrical; Studios Adj. EBITDA +$387M YoY Improving
Streaming global scale & ARPUQ1/Q2: rapid sub growth; ARPU pressured by mix and ad-lite rollout; guidance ≥$1.3B Adj. EBITDA +2.3M subs to 128M; domestic ARPU -13% on distribution renewal; global ARPU $6.64 Subs up; ARPU down near-term
EU market launchesGroundwork for DE/IT, UK/IE in 2026 Reiterated timing; expect reacceleration of distribution revenue in 1H26 On track
Linear optimization & sports strategyReinvested savings; expanded rights (CFP, MLB/NHL) Absence of NBA drives Q4 ad headwinds; standalone TNT Sports streaming app in U.S. progressing Transitioning portfolio
CNN digital evolutionN/A in Q1; upfront pricing resilience CNN All Access tier at $6.99; global expansion envisioned Expanding digital footprint
Strategic alternatives reviewSeparation plan underway Board initiated review after unsolicited interest; no timeline; no Q&A on process Adds corporate optionality

Management Commentary

  • CEO on transformation: “We’re delivering on our promise, and Warner Bros. Discovery is back. Global and stronger than ever” .
  • Studios pipeline and IP discipline: “We use tentpoles… mini tentpoles… and original… We haven’t seen Superman for 13 years… Harry Potter for 14 years… Lord of the Rings for over a decade” .
  • HBO’s quality-centric model: “It’s not how much, it’s how good… HBO has never delivered a steadier, more consistent pipeline” .
  • Sports/app strategy: “Standalone sports streaming app… skins on essentially the same product platform… limited incremental operating costs” .
  • Streaming trajectory: “We expect distribution revenue growth to be in the low single digit range during the fourth quarter… reaccelerate in the first half of 2026” .

Q&A Highlights

  • Sports monetization and standalone app: Management emphasized modular app strategy with limited incremental costs and bundling opportunities; U.S. TNT Sports app under development .
  • Linear distribution trends: Recent renewals provided flexibility; expect improved trajectory amid industry changes .
  • HBO content development edge: Unique creative team and “appointment viewing” strategy as a differentiator; strengthened coordination with WBTV .
  • Studios profitability bridge: Disciplined slate leveraging tentpoles and franchises; merchandising and experiences to enhance monetization .
  • ARPU dynamics: Near-term U.S. ARPU pressure from distribution reset and ad-supported mix; expect ARPU growth in 2H26 on pricing, ads, and password-sharing enforcement .

Estimates Context

MetricQ1 2025 Consensus*Q1 2025 ActualQ2 2025 Consensus*Q2 2025 ActualQ3 2025 Consensus*Q3 2025 Actual
Revenue ($USD Billions)$9.59*$8.98 $9.82*$9.81 $9.18*$9.05
EPS ($)-$0.118*-$0.18 -$0.124*$0.63 -$0.052*-$0.06
EBITDA ($USD Billions)$2.08*$2.105 Adj. EBITDA $1.79*$1.953 Adj. EBITDA $2.19*$2.470 Adj. EBITDA

Notes:

  • Company-reported Adjusted EBITDA shown for actuals; consensus “EBITDA” may not be fully comparable to company Adjusted EBITDA due to definitional differences.
  • *Values retrieved from S&P Global.

Implications:

  • Q3 misses on revenue and EPS were modest; Studios strength and Streaming subs growth underpin resilience. The large Q2 EPS beat was driven by debt extinguishment gains (non-operational), limiting read-through for ongoing EPS power .
  • Given Q4 ad headwinds (NBA absence) and ARPU pressure, Street may trim near-term Streaming revenue/EBITDA estimates; Studios trajectory could drive upward revisions to FY25 segment EBITDA.

Key Takeaways for Investors

  • Studios momentum is a near-term anchor: theatrical and licensing strength drove a substantial YoY EBITDA increase; management’s disciplined IP strategy supports sustainability .
  • Streaming growth continues despite ARPU pressure: net adds strong; reacceleration expected in 1H26 on EU launches, password sharing enforcement, and pricing actions .
  • Linear headwinds persist near term: ad declines and NBA absence will pressure Q4; watch CNN All Access and TNT Sports digital initiatives as offsetting levers .
  • Balance sheet progression: continued deleveraging and liquidity provide strategic flexibility amid the Board’s review of alternatives .
  • Estimate revisions likely mixed: streaming/ad headwinds vs. Studios outperformance; monitor guidance cadence and EU launch timelines for 2026 trajectory .
  • Corporate optionality is a potential catalyst: strategic alternatives review (including possible transactions) introduces upside optionality but also process risk/timing uncertainty .
  • Actionable: Lean into Studios-driven upside and EU launch catalysts; fade near-term ad headwinds; reassess valuation on any transaction-related developments and improving net leverage .

Best AI for Equity Research

Performance on expert-authored financial analysis tasks

Fintool-v490%
Claude Sonnet 4.555.3%
o348.3%
GPT 546.9%
Grok 440.3%
Qwen 3 Max32.7%