10-QPeriod: Q1 FY2022

Warner Bros. Discovery, Inc. Quarterly Report for Q1 Ended Mar 31, 2022

Filed April 26, 2022For Securities:WBD

Summary

Warner Bros. Discovery, Inc. (WBD) has reported its first quarterly results following the significant merger with WarnerMedia on April 8, 2022. The period ending March 31, 2022, reflects the standalone Discovery, Inc. operations prior to the merger's full integration. Total revenues for the quarter increased to $3.16 billion, up from $2.79 billion in the prior year, driven by growth in both advertising and distribution revenues. Net income available to common stockholders was $456 million, a substantial increase from $140 million in the prior year, with diluted EPS at $0.69 compared to $0.21. Despite the positive top-line and bottom-line growth as a standalone entity, investors should note that these results are not directly comparable to future periods due to the transformative merger. The company's balance sheet shows total assets of $33.8 billion and total liabilities of $20.2 billion as of March 31, 2022. Notably, goodwill remains substantial at $12.9 billion. The company also has a significant debt load, with total debt amounting to $14.4 billion (net of unamortized discount). The immediate aftermath of the merger, including integration costs and the accounting for the business combination, will be key areas to monitor in upcoming filings.

Financial Highlights

50 data points
Beta

Revenue

$3.16B

60.9% Gross Margin

Net Income

$456.00M

14.4% Net Margin

EPS (Diluted)

$0.69

Total Assets

$33.80B

Cash & Equivalents

$4.16B

Free Cash Flow

$238.00M

Financial Statements
Beta
Revenue$3.16B
Cost of Revenue$1.24B
Gross Profit$1.92B
SG&A Expenses$1.04B
Operating Expenses$2.81B
Operating Income$353.00M
Interest Expense$153.00M
Net Income$456.00M
EPS (Basic)$0.69
EPS (Diluted)$0.69
Shares Outstanding (Basic)591.00M
Shares Outstanding (Diluted)665.00M

Key Highlights

  • 1Total revenues increased by 13% year-over-year to $3.16 billion for the three months ended March 31, 2022.
  • 2Net income available to Warner Bros. Discovery, Inc. shareholders more than tripled to $456 million from $140 million in the prior year's period.
  • 3Diluted Earnings Per Share (EPS) rose to $0.69 from $0.21 in the comparable prior-year period.
  • 4The company had $4.16 billion in cash and cash equivalents as of March 31, 2022, with no outstanding borrowings under its credit facility or commercial paper program.
  • 5Significant investments in content and next-generation initiatives are ongoing, with content rights totaling $4.0 billion net.
  • 6The company completed the transformative merger with WarnerMedia on April 8, 2022, which will significantly alter future financial reporting and comparability.
  • 7Total debt stood at $14.4 billion (net of unamortized discount) as of March 31, 2022.

Frequently Asked Questions

The merger with WarnerMedia closed on April 8, 2022, shortly after the end of this reporting period (March 31, 2022). Therefore, these financial statements primarily reflect the results of Discovery, Inc. as a standalone entity prior to the merger. The financial results of the combined entity will not be comparable to these historical results, and future reports will include the consolidated financial performance of both WarnerMedia and Discovery.

Total revenues for the three months ended March 31, 2022, increased by 13% to $3.16 billion, compared to $2.79 billion in the prior year. This growth was driven by a 5% increase in advertising revenue and a 9% increase in distribution revenue, with 'Other' revenue seeing a substantial rise.

As of March 31, 2022, Warner Bros. Discovery reported $14.4 billion in net debt. The company maintained a healthy liquidity position with $4.16 billion in cash and cash equivalents and had no outstanding borrowings under its revolving credit facility or commercial paper program at that date. However, significant new indebtedness was incurred in connection with the WarnerMedia merger.

The company operates through two main segments: U.S. Networks and International Networks. For the quarter, U.S. Networks generated $1.93 billion in revenue and $1.025 billion in Adjusted OIBDA, while International Networks generated $1.23 billion in revenue and $161 million in Adjusted OIBDA. Corporate, inter-segment eliminations, and other contributed a net loss.