Warner Bros. Discovery(US:WBD) ZACKS·2025-11-07 17:40Core Insights - Warner Bros. Discovery (WBD) reported a Q3 2025 loss of 6 cents per share, missing the Zacks Consensus Estimate of a loss of 4 cents, compared to earnings of 5 cents per share in the same quarter last year [1] - Revenues decreased by 6% year over year to $9.05 billion, falling short of the Zacks Consensus Estimate by 1.44% [1] Revenue Breakdown - Distribution revenues decreased by 4% ex-forex, impacted by declines in domestic linear pay TV subscribers and the renewal of the HBO Max domestic distribution deal [2] - Advertising revenues fell by 17% ex-forex, as growth in ad-lite streaming subscribers was offset by declines in domestic linear audience [2] - Content revenues decreased by 3% ex-forex, primarily due to the sublicensing of Olympic sports rights in Europe last year, although theatrical releases performed stronger this quarter [2] - Other revenues declined by 7% ex-forex year over year [2] Subscriber Metrics - WBD ended Q3 2025 with 128 million global subscribers across Max, HBO Max, HBO, and Discovery+, an increase of 2.3 million sequentially [3][4] - Domestic average revenue per user (ARPU) fell to $10.40, while international ARPU was $3.7 [3] Segment Performance - Streaming segment revenues were flat year over year at $2.6 billion, with subscriber-related revenues growing by 1% ex-forex [5][6] - Studios segment profits rose to $695 million, up from $308 million a year ago, with content revenues increasing by 26% ex-forex to $3.11 billion [7] - Global Linear Networks revenues decreased by 23% ex-forex to $3.9 billion [5][9] Financial Health - WBD repaid $1.2 billion of debt during the quarter, ending with $34.5 billion of gross debt and a net leverage ratio of 3.3x [10] - Cash and cash equivalents were $4.29 billion as of September 30, 2025, down from $4.88 billion at the end of June 2025 [10] - Free cash flow increased to $701 million from $632 million, driven by lower cash interest and working capital timing [12] Future Guidance - WBD targets at least 150 million streaming subscribers by the end of 2026 and anticipates a profit of approximately $1.3 billion from the streaming segment in 2025 [13] - The Studios segment is expected to exceed $2.4 billion in EBITDA in 2025, with progress towards a $3 billion EBITDA goal [13]