Warner Bros. Discovery (WBD) Financials

Warner Bros. Discovery (NASDAQ: WBD) has shown a noticeable shift in its financial performance and position over the last four years based on quarterly income statements, balance sheets, and cash flow statements.

Positive Financial Trends:

• The company returned to profitability in Q2 2025 with a consolidated net income of $1.588 billion, a significant turnaround from losses exceeding $10 billion in 2024 Q2.
• Operating revenues increased to $9.812 billion in Q2 2025 from $9.719 billion in Q1 2025, showing continued growth in top-line sales.
• Net cash from continuing operating activities was healthy at $983 million in Q2 2025, demonstrating solid cash generation.
• Total equity increased to $37.3 billion in Q2 2025 from $35.1 billion in Q1 2025, indicating gradual strengthening of the balance sheet.
• The company’s financing activities in Q2 2025 resulted in net positive cash inflows, with issuance of debt exceeding repayments slightly, possibly for refinancing or strategic investments.

Neutral Observations:

• Depreciation and amortization expenses remain elevated (approximately $5.1 billion in Q2 2025 combined), consistent with the company's significant intangible assets and goodwill.
• Goodwill and intangible assets remain substantial on the balance sheet (~$25.9 billion goodwill and $29.9 billion intangibles in Q2 2025), reflecting prior acquisitions which bears watch for impairment risks.
• Total assets have slightly declined over recent quarters from $134 billion in early 2022 to $102 billion in mid-2025, indicating some asset base management or disposals.
• Effective tax expenses have been significant but in line with pre-tax income changes.

Negative Financial Trends and Risks:

• The company experienced large losses throughout 2023 and much of 2024, with net losses peaking at around $10 billion in Q2 2024, primarily due to high operating expenses and restructuring charges.
• Total liabilities remain very high, over $64 billion in Q2 2025, with a large amount of long-term debt (~$34.4 billion), indicating significant leverage risk.
• Restructuring and impairment charges have been recurring and substantial, such as $9.4 billion impairment in Q2 2024 and ongoing charges in subsequent quarters, which weigh on profitability.
• Operating expenses in Q2 2024 spiked dramatically to $13.7 billion, far surpassing revenue, which pressured margins heavily.
• Negative earnings per share persisted through 2022 and much of 2024, although Q2 2025 showed a positive $0.63 diluted EPS, the historical losses highlight volatility.
• Cash and equivalents fluctuate considerably, decreasing during periods of high debt repayment and restructuring outflows, which may impact liquidity management.

Summary:

Warner Bros. Discovery has battled through significant losses and high restructuring costs over the past few years but has recently returned to profitability in early 2025. The company maintains substantial intangible assets and a high level of debt, which presents ongoing risk. Encouraging trends in cash flow and net income in recent quarters offer a positive outlook, but investors should be cautious of the high leverage and prior earnings volatility. Ongoing monitoring of operating expenses and restructuring impacts will be key as the company aims to stabilize and grow earnings.