Warner Bros 2025 Q2 Earnings Strong Performance as Net Income Surges 115.8%

Warner Bros Discovery reported solid fiscal 2025 Q2 results, returning to profitability with a significant turnaround in net income. The company exceeded expectations by achieving $1.59 billion in net income, a 115.8% improvement from a $10.03 billion loss in the prior-year quarter. CEO David Zaslav outlined a clear path to long-term growth through content differentiation and strategic deleveraging ahead of the 2026 corporate split.

Revenue

Warner Bros Discovery reported total revenue of $9.57 billion in Q2 2025, a 1.6% increase from $9.42 billion in the same period the previous year. The growth was driven by stronger content revenues, which were bolstered by the success of theatrical releases. However, advertising revenues declined, impacted by domestic linear audience losses despite gains in streaming subscribers. Distribution revenues remained relatively flat as the growth in global streaming was offset by ongoing domestic linear pay TV subscriber declines.

Earnings/Net Income

Warner Bros Discovery returned to profitability in Q2 2025, reporting a net income of $1.59 billion, a remarkable 115.8% increase from a net loss of $10.03 billion in the prior-year quarter. Earnings per share also rebounded significantly, with EPS rising to $0.64 from a loss of $4.07 a year earlier. This represents a 115.7% positive change and highlights the company’s successful cost and restructuring efforts.

Price Action

The stock of Warner Bros Discovery (WBD) has experienced mixed performance in recent trading periods. Over the latest full trading week, shares declined by 9.95%, and 9.81% on the most recent trading day. However, the stock posted a 3.94% gain month-to-date.

Post-Earnings Price Action Review

A strategy of buying WBD shares following the positive Q2 earnings report and holding for 30 days underperformed significantly, delivering a return of -5.57%. This lags behind the benchmark return of 51.69% over the same period. The strategy produced an excess return of -57.27% and a compound annual growth rate of -1.92%, indicating a poor investment outcome over the past three years. The approach was also marked by a negative Sharpe ratio of -0.04, underscoring its high volatility and poor risk-adjusted returns.

CEO Commentary

CEO David M. Zaslav highlighted the company’s momentum in achieving key strategic milestones, including record Emmy nominations and the successful launch of *Superman*, signaling a new era for DC. He noted HBO Max’s strong subscriber growth of 3.4 million in Q2 and emphasized investments in creative and operational capabilities. Zaslav expressed confidence in the company’s progress toward $2.4 billion in adjusted EBITDA for Studios in 2025 and $1.3 billion for Streaming, along with reaching 150 million+ subscribers by 2026. He also outlined a focus on deleveraging the balance sheet and positioning both companies for long-term success following the 2026 split.

Guidance

Warner Bros Discovery provided updated guidance for the remainder of 2025, with the CEO outlining a target of $2.4 billion in adjusted EBITDA for the Studios business and $1.3 billion for the Streaming segment. Zaslav also reiterated the company’s commitment to reaching more than 150 million HBO Max subscribers by the end of 2026, while continuing to invest in storytelling and global expansion to drive sustainable growth.

Additional News

In Q2 2025, Warner Bros Discovery successfully completed a $1.5 billion debt repayment tied to its 2026 term loan, reducing gross debt by $2.2 billion. The company also repaid an additional $500 million in debt during the quarter, bringing total gross debt reduction to $2.7 billion. The move was part of a larger debt restructuring plan, including the use of a $17 billion bridge facility. As of the end of Q2, the company held $4.9 billion in cash and reported 3.3x net leverage. Additionally, the company announced the separation of its Streaming & Studios and Global Linear Networks businesses, a major restructuring that aims to streamline operations and improve long-term financial flexibility. As of June 30, the company had 125.7 million streaming subscribers, up from 122.3 million in Q1.