Warner Bros. Discovery adds 2 million DTC subscribers in 1Q 2024
Thursday, May 9th, 2024
Warner Bros. Discovery Reports First-Quarter 2024 Results
NEW YORK — Warner Bros. Discovery, Inc. (the “Company”) (Nasdaq: WBD) today reported financial results for the quarter ended March 31, 2024.
David Zaslav, President and Chief Executive Officer of Warner Bros. Discovery said, “We are pleased with our progress in the first quarter as evidenced by strong results in important KPIs. We delivered meaningful growth in our streaming business with a nice acceleration in ad sales, generating nearly $90 million in positive EBITDA for the quarter. We will soon be rolling out Max to 29 countries across Europe, and the content lineup for Max over the coming year is one of our strongest ever. Warner Bros. Pictures also had a strong start to the year as the first studio to reach $1 billion in both overseas and global box office, and they have a great slate in the works. Importantly, we once again delivered strong free cash flow, even in our seasonally weakest FCF quarter. 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.”
Q1 Financial Summary & Operational Highlights
- Q1 total revenues were $9,958 million. Revenues decreased 7% ex-FX compared to the prior year quarter.
- Net loss available to Warner Bros. Discovery, Inc. was $(966) million, and includes $1,879 million of pre-tax acquisition-related amortization of intangibles, content fair value step-up, and restructuring expenses.
- Q1 total Adjusted EBITDA was $2,102 million, a 20% ex-FX decrease compared to the prior year quarter, primarily driven by the success of Hogwarts Legacy in the prior year quarter while Suicide Squad: Kill the Justice League generated significantly lower revenues in the current year quarter.
- Cash provided by operating activities increased to $585 million. Free cash flow increased to $390 million, a $1.3 billion improvement versus the prior year quarter.
- Repaid $1.1 billion of debt during Q1. Ended the quarter with $3.4 billion of cash on hand, $43.2 billion of gross debt, and 4.1x net leverage.
- Launched a tender offer today to repurchase outstanding debt.
- Global DTC subscribers were 99.6 million at the end of Q1, an increase of 2.0 million subscribers vs. Q4. Global DTC ARPU was $7.83, a 4% ex-FX increase vs. the prior year quarter.
- Successfully launched Max and migrated subscribers to the new platform across Latin America.
- ID’s breakout series, Quiet on Set: The Dark Side of Kids TV is the 3rd best series launch-to-date across both Max and HBO Max, behind only The Last of Us and House of the Dragon.
- Dune: Part Two and Godzilla x Kong: The New Empire have grossed over $1.2 billion in global box office. Dune: Part Two is the highest grossing movie of 2024 to date with over $700 million in global box office.
DTC Subscribers
In millions, except ARPU Q1 2024 Q4 2023 Q1 2023 ------------------------ ------- ------- ------- Domestic Total subscribers[1] 52.7 52.0 55.3 ARPU[2] $11.72 $11.65 $10.82 International Total subscribers[1] 46.9 45.6 43.2 ARPU[2] $3.75 $3.88 $3.68 ------------------------ ------- ------- ------- Total DTC subscribers[1] 99.6 97.7 98.5 Global ARPU[2] $7.83 $7.94 $7.54
Note: Domestic includes the U.S. and Canada. Subscriber counts in the above table are rounded and minor differences in totals may exist.
1. Direct-to-Consumer (“DTC”) Subscriber: The Company defines a “Core DTC Subscription” as: (i) a retail subscription to discovery+, HBO, HBO Max, Max, or a Premium Sports Product (defined below) for which we have recognized subscription revenue, whether directly or through a third party, from a direct-toconsumer platform; (ii) a wholesale subscription to discovery+, HBO, HBO Max, Max, or a Premium Sports Product for which we have recognized subscription revenue from a fixed-fee arrangement with a third party and where the individual user has activated their subscription; (iii) a wholesale subscription to discovery+, HBO, HBO Max, Max, or a Premium Sports Product for which we have recognized subscription revenue on a per subscriber basis; (iv) a retail or wholesale subscription to an independently-branded, regional product sold on a stand-alone basis that includes discovery+, HBO, HBO Max, Max, and/or a Premium Sports Product, for which we have recognized subscription revenue (as per (i)–(iii) above); and (v) users on free trials who convert to a subscription for which we have recognized subscription revenue within the first seven days of the calendar month immediately following the month in which their free trial expires.
The Company defines a “Premium Sports Product” as a strategically prioritized, sports-focused product sold on a stand-alone basis and made available directly to consumers.
The current “independently-branded, regional products” referred to in (iv) above consist of TVN/Player and BluTV.
We may refer to the aggregate number of Core DTC Subscriptions as “subscribers”.
The reported number of “subscribers” included herein and the definition of “DTC Subscription” as used herein excludes: (i) individuals who subscribe to DTC products, other than discovery+, HBO, HBO Max, Max, a Premium Sports Product, and independently-branded, regional products (currently consisting of TVN/ Player and BluTV), that may be offered by us or by certain joint venture partners or affiliated parties from time to time; (ii) a limited number of international discovery+ subscribers that are part of non-strategic partnerships or short-term arrangements as may be identified by the Company from time to time; (iii) domestic and international Cinemax subscribers, and international basic HBO subscribers; and (iv) users on free trials except for those users on free trial that convert to a DTC Subscription within the first seven days of the next month as noted above.
Domestic subscriber – We define a Domestic subscriber as a subscription based either in the United States of America or Canada.
International subscriber – We define an International subscriber as a subscription based outside of the United States of America or Canada.
2. ARPU: The Company defines DTC Average Revenue Per User (“ARPU”) as total subscription revenue plus net advertising revenue for the period divided by the daily average number of paying subscribers for the period. Where daily values are not available, the sum of beginning of period and end of period divided by two is used.
Excluded from the ARPU calculation are: (i) Revenue and subscribers for DTC products, other than discovery+, HBO, HBO Max, Max, a Premium Sports Product, and independently-branded, regional products (currently consisting of TVN/Player and BluTV), that may be offered by us or by certain joint venture partners or affiliated parties from time to time; (ii) A limited amount of international discovery+ revenue and subscribers that are part of non-strategic partnerships or short-term arrangements as may be identified by the Company from time to time; (iii) Cinemax, Max/HBO hotel and bulk institution (i.e., subscribers billed on a bulk basis), and international basic HBO revenue and subscribers; and (iv) Users on free trials who convert to a subscription for which we have recognized subscription revenue within the first seven days of the calendar month immediately following the month in which their free trial expires.
Links: Warner Bros. Discovery