Warner Bros. Discovery (NASDAQ:) reported first-quarter results that fell short of Wall Street expectations. The company’s shares initially fell but are now up 1.5% on the day.
The media giant posted an adjusted loss per share of -$0.40, which was $0.17 below the analyst estimate of -$0.23. Revenue for the quarter also missed the mark, coming in at $9.96 billion compared to the consensus estimate of $10.22 billion.
The company’s revenue decreased by 7% from the same quarter last year, excluding foreign exchange impacts. This decline was primarily driven by lower revenues from the game Suicide Squad: Kill the Justice League compared to the prior year’s success of Hogwarts Legacy.
Despite the earnings miss, Warner Bros. Discovery’s CEO, David Zaslav, highlighted the company’s strong performance in key areas, including a nearly $90 million positive EBITDA in the streaming business and an acceleration in ad sales. Zaslav also noted the company’s significant free cash flow improvement and debt repayment efforts during the quarter.
Warner Bros. Discovery’s global direct-to-consumer subscribers grew to 99.6 million, an increase of 2.0 million from the previous quarter, with an average revenue per user of $7.83, marking a 4% rise excluding foreign exchange impacts.
The company’s net loss of -$966 million included significant pre-tax acquisition-related amortization of intangibles, content fair value step-up, and restructuring expenses.
Free cash flow saw a substantial improvement, increasing to $390 million, which is a $1.3 billion enhancement compared to the same quarter last year.
In his statement, Zaslav expressed confidence in the company’s strategic moves and the upcoming European expansion of Max, as well as the strong content lineup planned for the year. “We continue to make bold moves to transform our company for the future as we position ourselves to take full advantage of the opportunities ahead,” said Zaslav.
Reacting to the results, analysts at Goldman Sachs said the results were better than expected. The firm noted the company’s strength in publishing, which was offset by some deceleration in recorded.
“Warner Music Group reported mixed FY2Q24 results that beat across consolidated Revenue ($1,494M vs. $1,479M Visible Alpha Consensus Data) and Adjusted OIBDA ($312M vs. $304M consensus) but missed on Recorded Music Streaming Revenue growth (Adjusted YoY CC growth of +11.1% vs. consensus +12.4%), which decelerated sequentially from 11.4% in FY1Q24,” wrote the bank.
