10-QPeriod: Q3 FY2023

Warner Bros. Discovery, Inc. Quarterly Report for Q3 Ended Sep 30, 2023

Filed November 8, 2023For Securities:WBD

Summary

Warner Bros. Discovery, Inc. (WBD) reported revenues of $9.98 billion for the third quarter of 2023, a slight increase of 2% compared to the prior year, demonstrating resilience despite industry headwinds. While total costs and expenses significantly decreased by 18% to $9.88 billion, largely due to a substantial reduction in restructuring and other charges, the company still posted an operating loss of $97 million for the quarter, albeit a significant improvement from the $2.19 billion operating loss in Q3 2022. Net loss available to common stockholders narrowed to $417 million ($0.17 per share) from $2.31 billion ($0.95 per share) in the year-ago period. The company's DTC segment showed promising signs with a 5% revenue increase to $2.44 billion and a significant improvement in Adjusted EBITDA, which moved from a loss of $634 million to a profit of $111 million, largely driven by more efficient marketing spend and content cost management. The ongoing strikes by the Writers Guild of America (WGA) and Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) have impacted production schedules and content delivery, though management noted a positive impact on cash flow from delayed production spending. The company continues to focus on cost synergies and operational efficiency as it navigates the evolving media landscape.

Financial Highlights

48 data points
Beta

Revenue

$9.98B

Net Income

-$417.00M

-4.2% Net Margin

EPS (Diluted)

$-0.17

Total Assets

$123.75B

Cash & Equivalents

$2.38B

Free Cash Flow

$2.06B

Financial Statements
Beta
Revenue$9.98B
SG&A Expenses$2.29B
Operating Expenses$9.88B
Operating Income$97.00M
Interest Expense$574.00M
Net Income-$417.00M
EPS (Basic)$-0.17
EPS (Diluted)$-0.17
Shares Outstanding (Basic)2.44B
Shares Outstanding (Diluted)2.44B

Key Highlights

  • 1Total revenues for Q3 2023 increased by 2% year-over-year to $9.98 billion, driven by growth in Distribution and Content segments.
  • 2Operating loss significantly improved to $97 million from $2.19 billion in the prior year's quarter, reflecting substantial cost reductions.
  • 3Net loss available to common stockholders narrowed to $417 million ($0.17 per share) from $2.31 billion ($0.95 per share) in Q3 2022.
  • 4The DTC segment saw revenue growth of 5% to $2.44 billion and turned profitable in Adjusted EBITDA to $111 million, up from a loss of $634 million in Q3 2022.
  • 5Costs of revenues decreased by 6% in Q3 2023, and Selling, General, and Administrative expenses were down 12%, demonstrating effective cost management.
  • 6Despite the WGA strike concluding, the ongoing SAG-AFTRA strike continues to impact production and content delivery.
  • 7The company generated $3.90 billion in cash from operating activities for the first nine months of 2023, a significant increase from $1.46 billion in the same period last year.

Frequently Asked Questions

Warner Bros. Discovery reported a slight increase in revenue to $9.98 billion for Q3 2023, up 2% year-over-year. While still experiencing an operating loss of $97 million and a net loss of $417 million ($0.17 per share), both figures represent significant improvements compared to the same quarter in 2022, indicating progress in cost management and operational efficiency.

The DTC segment showed positive momentum, with revenues increasing by 5% to $2.44 billion. Critically, the segment's Adjusted EBITDA turned positive, reaching $111 million compared to a loss of $634 million in the prior year's quarter, driven by revenue growth and improved cost controls, particularly in marketing.

The Writers Guild of America (WGA) strike concluded in late September 2023, with a new agreement ratified. However, the Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) strike continued as of the filing date. These strikes have led to paused productions and delayed spending, which management noted as having a positive impact on cash flow from operations due to delayed spending, but also a negative impact on content delivery and performance.

Warner Bros. Discovery has focused on cost reduction, with total costs and expenses decreasing by 18% in Q3 2023, largely due to lower restructuring charges. The company also reported a substantial decrease in Selling, General, and Administrative expenses. Financially, the company has been actively managing its debt, including repayments and tender offers, and generated significant positive cash flow from operations for the first nine months of 2023.