Warner Bros. Discovery (WBD) reported Q1 2025 revenues of $8.98 billion, a 10% year-over-year decline, driven primarily by ongoing softness in the Global Linear Networks segment and challenging comps in Studios. Despite the revenue drop, the company narrowed its net loss to $(453) million, a notable improvement from $(966) million a year earlier. Adjusted EBITDA remained steady at $2.1 billion, up 4% in constant currency, supported by meaningful profitability gains in both the Streaming and Studios segments.

The Streaming segment stood out, posting $2.66 billion in revenue (+8% YoY) and a sharp improvement in adjusted EBITDA to $339 million, up from just $86 million in the prior-year quarter. The platform added 5.3 million subscribers, bringing the global total to 122.3 million, with growth largely attributed to international and ad-lite tier uptake. Management continues to prioritize sustainable growth and margin expansion in the streaming business.

In Studios, revenue declined 18% YoY to $2.31 billion, as expected, due to fewer theatrical and gaming releases compared to a strong Q1 2024 slate. However, adjusted EBITDA jumped 41% to $259 million, aided by cost reductions and a more favorable comparison base (no major impairments this year). Lower content-related expenses and strong licensing activity contributed to the margin expansion. Management anticipates stronger results in Q2, fueled by licensing deals and a promising theatrical lineup including Minecraft and Sinners.

Global Linear Networks, the company’s largest revenue segment, saw revenues decline 7% to $4.77 billion, and adjusted EBITDA fall 15% to $1.79 billion, reflecting continued erosion in domestic linear TV advertising and pay-TV subscriptions. Nonetheless, the segment remains highly cash generative, helping to support overall free cash flow, which totaled $302 million for the quarter. Advertising softness was partially offset by international resilience—especially in EMEA—and strong sports programming like March Madness.

On the balance sheet, WBD reported $553 million in operating cash flow, a slight YoY decline, and ended the quarter with $3.97 billion in cash. The company repaid $2.2 billion in debt, including a refinancing of $1.5 billion in 2026 notes, helping maintain a net leverage ratio of 3.8x, with a long-term goal of reducing it to 2.5–3x.

Management emphasized the recent corporate reorganization, now aligning the business into two divisions—Streaming & Studios and Global Linear Networks—to enhance focus and strategic flexibility. Looking ahead, WBD expects sequential improvement in Studios profitability, while cautioning that Q2 advertising revenues in Linear may face a 2% headwind due to the timing of sports rights and programming comps. Meanwhile, the company remains committed to disciplined content investment, cost control, and debt reduction amid macroeconomic uncertainty.