Warner Bros. Discovery Q4 Earnings Miss, Revenues Decline Y/Y

Core Insights - Warner Bros. Discovery (WBD) reported a fourth-quarter 2024 loss of $0.20 per share, missing the Zacks Consensus Estimate of a profit of $0.04 per share, and compared to a loss of $0.16 in the same quarter last year [1] - Revenues decreased by 2.5% year over year to $10.02 billion, falling short of the Zacks Consensus Estimate by 3.3% [1] Revenue Breakdown - Advertising revenues fell by 12% year over year to $1.83 billion, impacted by declines in domestic linear audience and a soft advertising market [2] - Distribution revenues remained flat at $4.91 billion, with growth in global DTC subscribers offset by domestic linear pay TV subscriber declines [2] - Content revenues decreased by 2% year over year to $2.9 billion, while other revenues increased by 16% to $371 million [2] Segment Performance - Studios segment, accounting for 36.5% of total revenues, reported a 15% increase in revenues to $3.65 billion, with content revenues up 16% ex-FX [3] - Games revenues declined by 29% ex-FX, attributed to the strong performance of last year's titles [4] - Networks revenues, making up 47.6% of total revenues, decreased by 5% year over year to $4.76 billion [4] Subscriber and ARPU Details - WBD ended Q4 2024 with 116.9 million global DTC subscribers, an increase of 6.4 million sequentially [8] - Global DTC ARPU decreased by 5% ex-FX to $7.44, influenced by growth in lower ARPU international markets and ad-tier subscriber growth [9] Operating and Financial Metrics - Selling, general and administrative expenses decreased by 9.7% year over year to $2.21 billion [10] - Total Adjusted EBITDA was $2.7 billion, an 11% ex-FX increase compared to the prior year [10] - Free cash flow was reported at $2.42 billion, down from $3.31 billion in the prior year [11] Balance Sheet Overview - As of December 30, 2024, cash and cash equivalents were $5.31 billion, up from $3.33 billion as of September 30, 2024 [13] - The company ended the quarter with $40 billion of gross debt and a net leverage ratio of 3.8X [13] - Average duration of outstanding debt was 13.4 years, with an average cost of 4.7% [13]