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

Warner Bros. Discovery WBD reported fourth-quarter 2024 loss of 20 cents per share, in contrast to the Zacks Consensus Estimate of an earnings of 4 cents. The company had incurred a loss of 16 cents in the year-ago quarter. Revenues decreased 2.5% year over year to $10.02 billion, which missed the Zacks Consensus Estimate by 3.3%.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Advertising revenues decreased 12% year over year to $1.83 billion as the growth in DTC ad-lite subscribers was more than offset by domestic linear audience declines and the continuing softness in the domestic linear advertising market. Distribution revenues remained flat year over year to $4.91 billion as growth in global DTC subscribers was partially offset by continued domestic linear pay TV subscriber declines. Content revenues declined 2% year over year to $2.9 billion. Other revenues were $371 million, up 16% from the year-ago quarter.Warner Bros. Discovery, Inc. Price, Consensus and EPS Surprise Warner Bros. Discovery, Inc. price-consensus-eps-surprise-chart | Warner Bros. Discovery, Inc. QuoteTop-Line DetailsStudios (36.5% of total revenues) reported revenues of $3.65 billion, up 15% from the year-ago quarter. Revenues increased 16% ex-FX from the prior-year quarter on a pro forma combined basis.Within the segment, content revenues returned 16% ex-FX to $3.39 billion. TV revenues increased 64% ex-FX, primarily driven by higher inter-segment content licensing and higher initial telecast deliveries, which were impacted by the WGA and SAG-AFTRA strikes in the prior year.Games revenues declined 29% ex-FX, primarily due to better performance of the previous year’s portfolio, mainly Hogwarts Legacy and Mortal Kombat 1 against the current offering. Theatrical revenues decreased 9% ex-FX, as a result of fewer releases in the current year vs. the prior year.Other revenues increased 12% ex-FX to $269 million.Networks revenues (47.6% of total revenues) decreased 5% on a year-over-year basis to $4.76 billion.Within the segment, distribution revenues decreased 4% ex-FX, primarily due to a 9% decline in domestic linear pay-TV subscribers and an approximately 100 bps impact from the AT&T SportsNet exit, partially offset by a 6% increase in domestic affiliate rates.Advertising revenues decreased 16% ex-FX, primarily due to a decline of 28% in domestic network audiences and the continuing softness in the domestic linear advertising market.Content revenues increased 74% ex-FX, primarily due to the timing of content licensing deals.DTC revenues (26.4% of revenues) rose 5% from the year-ago quarter to $2.65 billion. Within the segment, distribution revenues increased 8% ex-FX, primarily driven by a 20% rise in subscribers, as well as higher pricing following the launch of Max in Latin America and Europe in the first half of 2024. This was partially offset by continued domestic linear wholesale subscriber declines.Advertising revenues surged 27% ex-FX, primarily driven by an increase in ad-lite subscribers.Content revenues plunged 40% ex-FX, primarily due to fewer third-party licensing deals.Subscriber DetailsWBD ended the fourth quarter of 2024 with 116.9 million global DTC subscribers, which increased 6.4 million sequentially. Global DTC ARPU decreased 5% ex-FX to $7.44, driven by growth in lower ARPU international markets, ad-tier subscriber growth, and an increase in domestic wholesale subscribers, partially offset by higher pricing.Operating DetailsIn the fourth quarter, selling, general and administrative expenses decreased 9.7% from the year-ago quarter’s levels to $2.21 billion.Total Adjusted EBITDA was $2.7 billion, an 11% ex-FX increase compared to the prior-year quarter, primarily due to growth in the DTC and Studios segments.Fourth-quarter 2024 cash provided by operating activities came in at $2.71 billion compared with $3.57 billion in the prior-year period.The company reported a free cash flow of $2.42 billion compared with a free cash flow of $3.31 billion in the prior-year period, primarily driven by higher net content investment, in part due to the prior year impact from the WGA and SAG-AFTRA strikes, partially offset by higher operating profits and lower restructuring expenses.The company reported an operating income of $162 million compared with an operating loss of $182 million in the year-ago quarter.Net income available to Warner Bros. Discovery, Inc. was $(0.5) billion, which includes $1.9 billion of pre-tax acquisition-related amortization of intangibles, content fair value step-up, and restructuring expenses.Balance SheetAs of Dec. 30, 2024, cash & cash equivalents were $5.31 billion compared with $3.33 billion as of Sept. 30, 2024.WBD repaid or repurchased $0.5 billion of debt during the reported quarter and ended the quarter with $40 billion of gross debt and 3.8X net leverage.As of Dec. 31, 2024, the average duration of the company's outstanding debt was 13.4 years, with an average cost of 4.7%. As of Dec. 31, 2024, the company had $4,637 million drawn on its revolving receivables program, a $124 million decrease compared with the third quarter and a $563 million decrease year over year.Zacks Rank & Stocks to ConsiderCurrently, Warner Bros. Discovery carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the Consumer Discretionary sector are Flutter Entertainment FLUT, Life Time Group Holdings LTH and Accel Entertainment ACEL, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Shares of Flutter Entertainment have raised 5.7% year to date. FLUT is set to report fourth-quarter 2024 results on March 4.Shares of Life Time Group Holdings have gained 42.9% year to date. LTH is set to report fourth-quarter 2024 results on Feb. 27.Shares of Accel Entertainment have returned 11.1% year to date. ACEL is set to report fourth-quarter 2024 results on Feb. 27.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Warner Bros. Discovery, Inc. (WBD): Free Stock Analysis Report Accel Entertainment, Inc. (ACEL): Free Stock Analysis Report Life Time Group Holdings, Inc. (LTH): Free Stock Analysis Report Flutter Entertainment PLC (FLUT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks