Warner Bros 2025 Q1 Earnings Misses Targets as Net Income Improves by 53%

Warner Bros(WBD) reported its fiscal 2025 Q1 earnings on May 08th, 2025. Warner Bros. Discovery’s first-quarter results showed a revenue decline and a narrower net loss compared to last year, missing general analyst expectations. The company’s guidance suggests an 85% increase in EBITDA for 2025, aiming to reach $1.3 billion, which is a raise from 2024 benchmarks. Despite the financial challenges, Warner Bros. Discovery remains optimistic about its growth trajectory, driven by strong content from HBO and strategic investments in streaming services. Analysts had expected Warner Bros. Discovery to report higher revenues, but the company’s focus on high-quality content and subscriber growth continues to buoy its long-term outlook.

Revenue

The total revenue of Warner Bros decreased by 9.9% to $8.73 billion in 2025 Q1, down from $9.69 billion in 2024 Q1.

Earnings/Net Income

Warner Bros narrowed losses to $0.18 per share in 2025 Q1 from a loss of $0.40 per share in 2024 Q1, representing a 55.0% improvement. Meanwhile, the company successfully reduced its net loss to $449 million in 2025 Q1, compared to the $955 million net loss in 2024 Q1. The EPS improvement reflects positive financial progress.

Price Action

The stock price of Warner Bros has jumped 10.42% during the latest trading day, has climbed 6.88% during the most recent full trading week, and has jumped 11.37% month-to-date.

Post-Earnings Price Action Review

Over the past five years, Warner Bros (WBD) shares have experienced significant losses when purchased after a quarter of declining revenue and held for 30 days. This strategy has resulted in a negative return of -33.42%, starkly contrasting with a benchmark return of 40.11%. The excess return was a disappointing -73.53%, with a compound annual growth rate (CAGR) of -14.15%. The strategy also suffered a substantial maximum drawdown of -45.40%, and its Sharpe ratio of -0.35 indicates a lack of risk-adjusted returns. These figures highlight the ineffectiveness of this investment approach, as it consistently fails to deliver any profitable returns for shareholders.

CEO Commentary

David Zaslav, President and CEO of Warner Bros. Discovery, emphasized that the company's focus on high-quality storytelling is driving its success, stating, "Our commitment to high-quality storytelling... continues to be the engine that powers Warner Bros. Discovery." He highlighted significant growth, noting over 22 million new subscribers in the past year and an EBITDA of $339 million in Q1 2025. Zaslav expressed optimism about exceeding the $1.3 billion EBITDA target for 2025, attributing this to strong content from HBO and a differentiated streaming service. He conveyed confidence in long-term sustainable growth and shareholder value, stating, "Our global reach... gives us real confidence."

Guidance

Warner Bros. Discovery aims to achieve at least $1.3 billion in EBITDA for 2025, reflecting an 85% increase from 2024. The company anticipates surpassing 150 million subscribers by the end of next year. Additionally, Zaslav indicated a goal to reach $3 billion in EBITDA for the studio segment, leveraging a strong content slate and strategic investments. The company also expects continued cash generation from global linear networks, positioning itself for long-term growth amidst ongoing industry transformation.

Additional News

Warner Bros. Discovery is rumored to be considering a spin-off of its cable channels, following disappointing first-quarter results despite growth in streaming. This speculation has led to a rise in the company's stock price, as investors anticipate a strategic restructuring similar to NBCUniversal’s plans. Additionally, CEO David Zaslav has faced criticism for strategic missteps, including a shift away from key sports broadcasting rights. The company has also announced the closure of three video game studios and the cancellation of a Wonder Woman game, aiming to boost profitability in its interactive entertainment segment. These non-earnings developments indicate Warner Bros. Discovery’s ongoing efforts to adapt to industry changes and investor expectations.