Warner Bros. Discovery (WBD) Reports Q1, Falling Short of Expectations

Warner Bros. Discovery (NYSE: WBD) has released its financial results for the first quarter of 2025, highlighting a mixed performance with notable achievements in some areas and challenges in others. This article provides an analysis of the company’s current quarter performance compared to expectations and offers insights into its future guidance.

Warner Bros. Discovery Falls Short of Expectations with Q1 Results

Warner Bros. Discovery (WBD) reported total revenues of $8.979 billion for the first quarter of 2025, marking a 10% decrease from the previous year’s $9.958 billion. This was slightly below the expected revenue of $9.69 billion. The company’s net loss was $453 million, an improvement from last year’s $966 million loss, but the earnings per share (EPS) of $-0.18 fell short of the anticipated $-0.12. The decline in revenues was primarily driven by a 27% decrease in content revenue, which was impacted by lower box office and home entertainment revenues.

Despite the overall revenue decline, Warner Bros. Discovery saw growth in its streaming segment, with revenues increasing by 9% to $2.656 billion. The company added 5.3 million global streaming subscribers, bringing the total to 122.3 million. This growth was fueled by the expansion of Max and new domestic distribution deals, although the global average revenue per user (ARPU) decreased by 9% to $7.11 due to a shift towards lower ARPU international markets.

In terms of profitability, the company’s adjusted EBITDA remained stable at $2.105 billion, showing a slight increase from the previous year. This was largely due to the growth in the streaming and studios segments. The studios segment, however, experienced an 18% decline in revenues, attributed to lower theatrical and home entertainment revenues, despite an increase in TV revenues. The company’s efforts to manage costs were evident, with a 4% decrease in costs of revenues in the streaming segment and a 29% decrease in studios costs.

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WBD’s Guidance Reflects Cautious Optimism

Looking ahead, Warner Bros. Discovery’s guidance reflects cautious optimism. The company plans to continue its focus on expanding its streaming services and managing its debt levels. During the first quarter, Warner Bros. Discovery repaid $2.2 billion of debt, ending the quarter with $4 billion in cash on hand and a gross debt of $38 billion. The company also refinanced $1.5 billion of notes due in 2026, which is expected to result in net cash interest savings.

Warner Bros. Discovery’s strategic focus remains on leveraging its diverse portfolio of content and expanding its streaming services. The company anticipates continued growth in its streaming subscriber base, driven by the global expansion of its Max platform and new distribution deals. However, the company acknowledges challenges in the traditional media segments, particularly in the domestic linear pay TV market, which saw a 9% decline in subscribers.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.