Warner Bros. Stock Soars Following Q1 Performance, Streaming Gains

Warner Bros. Discovery, Inc. (NASDAQ: WBD) reported fiscal first-quarter results on Thursday. The company reported a quarterly revenue decline of 9% ex-FX year-on-year to $8.98 billion, missing the analyst consensus estimate of $9.60 billion. 

The EPS loss of 18 cents missed the analyst consensus loss estimate of 11 cents loss.

The net loss was $453 million, halved from a loss of $966 million Y/Y. WBD reported an adjusted EBITDA of $2.11 billion, a 4% ex-FX growth.

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Distribution revenues decreased 1% ex-FX to $4.89 billion due to domestic linear pay-TV subscriber declines. Advertising revenues decreased 8% ex-FX to $1.98 billion.

Content revenues decreased 25% ex-FX to $1.87 billion, primarily driven by lower box office and home entertainment revenues due to the stronger performance of the prior year’s theatrical releases and no Games releases in the current quarter.

Streaming: The company ended the quarter with 122.3 million subscribers versus 99.6 million Y/Y.

Streaming revenues increased 9% ex-FX to $2.66 billion. Distribution revenue increased 8% ex-FX due to a 23% increase in subscribers following Max’s continued global expansion and new domestic distribution deals.

Advertising revenue increased 35% ex-FX, primarily driven by increased ad-lite subscribers. Global streaming ARPU decreased 9% ex-FX to $7.11, primarily due to growth in lower ARPU international markets. Domestic streaming ARPU decreased 5% to $11.15, primarily due to a broader wholesale distribution of Max Basic with Ads.

Content revenue decreased 7% ex-FX, as Max’s launch in new international markets, including Australia, in the current quarter, resulted in lower third-party licensing.

Adjusted EBITDA for the Streaming Segment was $339 million, up from $86 million in Q1 2024.

Studios: Studios revenues decreased 16% ex-FX to $2.31 billion.

Content revenue decreased 17% ex-FX.

Theatrical revenue decreased 27% ex-FX, primarily due to the strong box office performance of Dune: Part Two and Godzilla x Kong: The New Empire in the prior year and home entertainment revenue from Wonka and Aquaman and the Lost Kingdom.

Games revenue decreased 48% ex-FX due to the prior year’s release of Suicide Squad: Kill the Justice League.

Adjusted EBITDA for the Studios Segment was $259 million, up from $184 million in Q1 2024.

Global Linear Networks: Global Linear Networks revenues decreased 6% ex-FX to $4.77 billion. Distribution revenue decreased 8% ex-FX, driven by a 9% decrease in domestic linear pay TV subscribers. 

Advertising revenue decreased 11% ex-FX, primarily driven by domestic networks audience declines of 27%. Content revenue increased 44% ex-FX Content revenue increased 44% ex-FX.

In the quarter, WBD generated $553 million in operating cash flow and $302 million in free cash flow and held $4.0 billion in cash and equivalents. 

Price Action: WBD stock is up 5.08% at $8.99 at the last check on Thursday.

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