Q1 2025 Consolidated Results - Q1 Revenue reached $807 million, a 10% increase year-over-year; excluding political revenue, the increase was 18%[10] - Consolidated Adjusted EBITDA remained flat at $105 million compared to Q1 2024[10] - The company's cash balance and total available liquidity stood at $168 million and $559 million, respectively, as of March 31, 2025[10] - Free Cash Flow was $(81) million[10] Digital Audio Group Results - Digital Audio Group Revenue increased by 16% to $277 million[10] - Podcast Revenue grew by 28% to $116 million[10] - Digital Revenue excluding Podcast increased by 9% to $161 million[10] - Digital Audio Group Adjusted EBITDA margin was 314%[10] Multiplatform Group Results - Multiplatform Group Revenue decreased by 4% to $473 million; excluding political revenue, the decrease was 3%[10] - Multiplatform Group Adjusted EBITDA margin was 148%[10] Modernization Program - The company is on track with its modernization program, expecting $150 million in net savings in 2025, primarily driven by technology and AI[28]

Part I – Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The Q1 2025 financial statements reflect a slight revenue increase, a significant net loss, decreased assets, and a widened stockholders' deficit [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets decreased to **$5.27 billion**, total liabilities slightly decreased, and the total stockholders' deficit widened to **$1.65 billion** Consolidated Balance Sheet Summary (Unaudited) | (In thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $1,159,561 | $1,361,842 | | **Total Assets** | **$5,268,093** | **$5,571,696** | | **Total Current Liabilities** | $729,832 | $870,280 | | **Long-term debt** | $5,032,066 | $5,048,968 | | **Total Liabilities** | $6,914,216 | $6,943,476 | | **Total Stockholders' Deficit** | **$(1,646,123)** | **$(1,371,780)** | [Consolidated Statements of Comprehensive Loss](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss) Q1 2025 saw a slight revenue increase and improved operating loss, but a significant **$280.9 million** net loss, primarily due to higher income tax expense and an investment loss Consolidated Statements of Comprehensive Loss Summary (Unaudited) | (In thousands, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Revenue** | $807,101 | $799,038 | | **Operating loss** | $(25,434) | $(34,708) | | **Gain (loss) on investments, net** | $(18,594) | $91,994 | | **Income tax benefit (expense)** | $(135,359) | $20,662 | | **Net loss** | **$(280,883)** | **$(18,108)** | | **Net loss attributable to the Company** | $(281,224) | $(18,508) | | **Net loss per common share - Basic & Diluted** | **$(1.84)** | **$(0.12)** | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2025, cash used for operating activities slightly increased, investing activities shifted from providing to using cash, and overall cash and cash equivalents decreased by **$91.9 million** Consolidated Statements of Cash Flows Summary (Unaudited) | (In thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Cash used for operating activities** | $(60,944) | $(59,277) | | **Cash provided by (used for) investing activities** | $(20,067) | $78,015 | | **Cash used for financing activities** | $(11,038) | $(3,548) | | **Net (decrease) increase in cash** | $(91,866) | $15,021 | | **Cash, cash equivalents and restricted cash at end of period** | $167,714 | $361,403 | [Notes to Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail segment performance, debt structure, and liquidity, highlighting three reportable segments and **$559.1 million** in total available liquidity as of March 31, 2025 - The company operates three reportable segments: Multiplatform Group (Broadcast radio, Networks, Sponsorships), Digital Audio Group (Digital businesses, Podcasting), and Audio & Media Services Group (Katz Media, RCS)[24](index=24&type=chunk) - As of March 31, 2025, the company had total available liquidity of **$559.1 million**, comprising **$167.7 million** in cash and **$391.4 million** in borrowing availability under its ABL Facility[20](index=20&type=chunk) Revenue by Segment (Q1 2025 vs Q1 2024) | (In thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Multiplatform Group** | $472,978 | $493,463 | | **Digital Audio Group** | $277,287 | $238,968 | | **Audio & Media Services Group** | $59,323 | $69,168 | | **Total Revenue** | **$807,101** | **$799,038** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A highlights **1.0%** consolidated revenue growth driven by Digital Audio, offset by Multiplatform decline, improved operating loss, but a significantly widened net loss, with **$150 million** in anticipated 2025 savings - Modernization initiatives implemented in 2024 are anticipated to generate approximately **$150 million** of net savings for the full year 2025[83](index=83&type=chunk) Key Financial Metrics (Q1 2025 vs Q1 2024) | (In thousands) | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | **Revenue** | $807,101 | $799,038 | 1.0% | | **Operating loss** | $(25,434) | $(34,708) | (26.7)% | | **Net loss** | $(280,883) | $(18,108) | 1,451.2% | | **Adjusted EBITDA** | $104,588 | $104,617 | — % | [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Q1 2025 consolidated revenue grew **1.0%** due to Digital Audio's **16.0%** increase, offset by Multiplatform and Audio & Media Services declines, while net loss significantly widened due to investment and tax swings Revenue by Stream (Q1 2025 vs Q1 2024) | (In thousands) | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | **Multiplatform Group** | $472,978 | $493,463 | (4.2)% | | Broadcast Radio | $340,736 | $359,338 | (5.2)% | | **Digital Audio Group** | $277,287 | $238,968 | 16.0% | | Podcast | $116,036 | $90,624 | 28.0% | | **Audio & Media Services Group** | $59,323 | $69,168 | (14.2)% | | **Total Revenue** | **$807,101** | **$799,038** | **1.0%** | - The increase in net loss to **$281.2 million** was primarily due to a **$101.4 million** gain on the sale of the company's investment in BMI in Q1 2024 and an increase in income tax expense in Q1 2025[93](index=93&type=chunk)[95](index=95&type=chunk) [Segment Results](index=25&type=section&id=Segment%20Results) Q1 2025 Digital Audio Group revenue grew **16.0%** with **27.8%** EBITDA increase, while Multiplatform and Audio & Media Services Groups experienced revenue and EBITDA declines Segment Performance (Q1 2025 vs Q1 2024) | (In thousands) | Revenue | Segment Adjusted EBITDA | | :--- | :--- | :--- | | **Multiplatform Group** | | | | Q1 2025 | $472,978 | $70,007 | | Q1 2024 | $493,463 | $77,182 | | % Change | (4.2)% | (9.3)% | | **Digital Audio Group** | | | | Q1 2025 | $277,287 | $87,083 | | Q1 2024 | $238,968 | $68,127 | | % Change | 16.0% | 27.8% | | **Audio & Media Services Group** | | | | Q1 2025 | $59,323 | $15,798 | | Q1 2024 | $69,168 | $23,695 | | % Change | (14.2)% | (33.3)% | [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2025, total available liquidity was **$559.1 million**, deemed sufficient for the next twelve months, with anticipated **$333.7 million** in remaining 2025 debt service and increased net debt - Total available liquidity as of March 31, 2025 was **$559.1 million**, consisting of **$167.7 million** in cash and **$391.4 million** of borrowing base availability under the ABL Facility[116](index=116&type=chunk) - Anticipated cash payments to service debt for the remainder of 2025 are approximately **$333.7 million**[118](index=118&type=chunk) Net Debt Calculation | (In thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Debt | $5,054,577 | $5,071,469 | | Less: Debt Premium | $278,106 | $289,752 | | Less: Cash and cash equivalents | $167,714 | $259,580 | | **Net Debt** | **$4,608,757** | **$4,522,137** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rates, foreign currency, and inflation, with **45%** of long-term debt at variable rates, where a **100 basis point** change impacts quarterly interest expense by **$5.4 million** - As of March 31, 2025, approximately **45%** of the company's long-term debt bore interest at floating rates[129](index=129&type=chunk) - A **100 basis point** change in floating interest rates is estimated to change quarterly interest expense by **$5.4 million**[129](index=129&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[138](index=138&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[139](index=139&type=chunk) Part II – Other Information [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various ordinary course legal proceedings, accruing for probable and estimable losses, which could materially affect future results - The company is involved in a variety of legal proceedings in the ordinary course of business and has accrued for probable and estimable losses[142](index=142&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) No material changes in risk factors were reported since the last Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes in risk factors were reported since the last Annual Report on Form 10-K[143](index=143&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not issue unregistered equity securities but repurchased **292,544** Class A common shares at **$2.20** per share from employees for tax withholding obligations Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 1 - January 31 | 3,040 | $2.21 | | February 1 - February 28 | 268,829 | $2.20 | | March 1 - March 31 | 20,675 | $2.20 | | **Total** | **292,544** | **$2.20** | - The repurchased shares were tendered by employees to satisfy tax withholding obligations in connection with the vesting of restricted stock[145](index=145&type=chunk)

Core Insights - Warner Bros. Discovery reported a quarterly loss of $0.18 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.12, but an improvement from a loss of $0.40 per share a year ago [1][2] - The company's revenues for the quarter were $8.98 billion, missing the Zacks Consensus Estimate by 7.34% and down from $9.96 billion year-over-year [3] - The stock has underperformed the market, losing about 19% since the beginning of the year compared to the S&P 500's decline of 4.3% [4] Financial Performance - The earnings surprise for the latest quarter was -50%, and the company has only surpassed consensus EPS estimates once in the last four quarters [2] - The current consensus EPS estimate for the upcoming quarter is -$0.19 on revenues of $9.72 billion, and for the current fiscal year, it is -$0.14 on revenues of $38.68 billion [8] Industry Context - Warner Bros. Discovery operates within the Zacks Broadcast Radio and Television industry, which is currently ranked in the top 38% of over 250 Zacks industries [9] - The industry outlook can significantly impact the stock's performance, with research indicating that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [9] Future Outlook - The estimate revisions trend for Warner Bros. Discovery is currently unfavorable, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [7] - The upcoming earnings call will be crucial for assessing future earnings expectations and stock price movements [4][5]

Financial Data and Key Metrics Changes - The company generated adjusted EBITDA of $246 million in Q4 2024, an increase of 18.2% compared to the prior year [6][20] - Consolidated revenues for the quarter were up 4.8% year over year, but down 1.8% when excluding political impacts [7][19] - The company reported a GAAP operating income of $104.5 million, compared to $79.8 million in the prior year quarter [20] - Free cash flow was negative $24 million due to debt transaction expenses and modernization costs, but would have been $111 million when adjusted [25] Business Line Data and Key Metrics Changes - The Digital Audio Group generated revenues of $339 million, up 6.7% year over year, with adjusted EBITDA of $119 million, up 2.1% [7][21] - Podcast revenues within the Digital Audio Group grew 6% year over year, totaling $140 million [21] - The Multiplatform Group's revenues were flat at $684 million, with adjusted EBITDA of $150 million, up 5.9% [13][23] - The Audio and Media Services Group saw revenues of $98 million, up 44.7% year over year, with adjusted EBITDA of $49 million, up 136% [15][23] Market Data and Key Metrics Changes - The company noted a slowdown in non-political advertising revenue just before the presidential election, which did not rebound as expected [19] - The Los Angeles market was disrupted by wildfires, impacting revenue, but is expected to normalize [46] Company Strategy and Development Direction - The company is focused on modernizing its operations, flattening the organization, and eliminating redundancies to accelerate earnings growth [5][6] - A comprehensive exchange transaction was completed to extend debt maturities and reduce overall debt levels, enhancing financial flexibility [5][24] - The company aims to integrate broadcast radio inventory into programmatic platforms to unlock new revenue opportunities [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for the year ahead despite economic uncertainties such as tariffs, inflation, and consumer confidence declines [26][48] - The company expects Q1 2025 adjusted EBITDA to be in the range of $100 million to $110 million, with revenues expected to decline low single digits compared to the prior year [27][28] - Management remains confident in the strength of their assets and the potential for recovery in advertising spending [49][50] Other Important Information - The company launched a redesigned iHeartRadio app, receiving positive feedback from listeners [12] - The company is the number one podcast publisher in the U.S. and is expanding its leadership position globally [10][11] Q&A Session Summary Question: How is the company thinking about monetizing broadcast listening going forward? - Management emphasized the importance of programmatic advertising and automated buying to fit broadcast radio inventory into modern buying systems [31][34] Question: Can you address the video podcasting opportunity? - Management noted that while there is interest in video podcasting, the majority of podcast users prefer audio, and the focus remains on consumer preferences [39][40] Question: What were the drivers of January's advertising growth? - Management indicated that January's growth was a result of a delayed response from advertisers following the election, but noted that Q1 is typically the lowest revenue quarter [58][60] Question: What are the expected drivers of growth in the podcasting business this year? - Management highlighted expanding product offerings, audience growth, and increased demand as key drivers for podcasting revenue growth [66] Question: Why was political advertising revenue lower than expected? - Management explained that political campaigns are becoming more data-driven, and the company is working to adapt to these changes for future cycles [67][68]