Warner Bros. Discovery ( WBD ) stock gave up its gains after it reported fiscal second-quarter results on Thursday. The company reported a quarterly revenue of $9.81 billion, flat year-on-year (Y/Y) ex-FX growth, missing the analyst consensus estimate of $9.72 billion. 

The earnings per share (EPS) of 63 cents topped the analyst consensus estimate of 22-cent loss.

The company reported a net income of $1.58 billion, compared to a loss of $9.99 billion Y/Y. WBD reported an adjusted EBITDA of $1.95 billion, a 9% ex-FX growth.

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Distribution revenues were flat ex-FX at $4.89 billion due to domestic linear pay-TV subscriber declines. Advertising revenues decreased 10% ex-FX at $2.22 billion due to domestic linear audience declines.

Content revenues increased 16% ex-FX to $2.47 billion, primarily driven by higher box office revenues due to the stronger performance of the theatrical releases in the current year quarter.

In the quarter, WBD generated $983 million in operating cash flow and $702 million in free cash flow and held $4.9 billion in cash and equivalents. 

Streaming

The company ended the quarter with 125.7 million subscribers versus 103.3 million Y/Y and 122.3 million quarter-over-quarter (Q/Q).

Streaming revenues increased 8% ex-FX to $2.79 billion. Distribution revenue increased 9% ex-FX due to a 22% increase in subscribers following HBO Max’s continued global expansion and new distribution deals.

Advertising revenue increased 17% ex-FX, primarily driven by increased ad-lite subscribers, partially offset by domestic pricing pressures.

Global streaming ARPU decreased 11% ex-FX to $7.14, primarily attributable to growth in lower ARPU international markets and an 8% decrease in domestic streaming ARPU to $11.16. The reduction in domestic streaming ARPU was mainly driven by the broader wholesale distribution of HBO Max Basic with Ads.

Content revenue decreased 21% ex-FX, primarily due to the launch of HBO Max in new international markets, which resulted in lower third-party licensing.

Adjusted EBITDA for the Streaming Segment was $293 million, versus $(107) million Y/Y.

Studios

Studios revenues increased 54% ex-FX to $3.80 billion.

Content revenue increased 59% ex-FX.

Theatrical revenue increased 38% ex-FX, primarily due to the strong box office performance of A Minecraft Movie, Sinners, and Final Destination: Bloodlines in the quarter.

Games revenue decreased 14% ex-FX primarily due to no releases in the current year.

Adjusted EBITDA for the Studios Segment was $863 million, up from $210 million Y/Y.

Global Linear Networks

Global Linear Networks revenues decreased 9% ex-FX to $4.80 billion. Distribution revenue declined 7% ex-FX, driven by a 9% decrease in domestic linear pay TV subscribers. 

Advertising revenue decreased 13% ex-FX, primarily due to 23% declines in domestic networks’ audience. Content revenue decreased 2% ex-FX, primarily due to the timing of third-party licensing deals.

Outlook

Warner Bros. Studios segment expects to reach at least $2.4 billion in adjusted EBITDA for the full year, advancing toward its $3 billion goal.

Warner Bros. projects $1.3 billion in streaming adjusted EBITDA for full-year 2025.

“We are well underway in executing WBD’s next chapter following the announced separation of Warner Bros. (Streaming & Studios) and Discovery Global Media (Global Networks). Over the last two months, we achieved several milestones in our path to completing the separation,” the company said in a press release.

Overall, Warner Bros. is on track to separate from Discovery Global Media in mid-2026.

Price Action: WBD stock is trading lower by 6.92% to $11.91 at last check Thursday.

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