Warner Bros. Discovery Inc. (NASDAQ:WBD)

Goodwill

The goodwill value showed a significant increase from 7,073 million USD at the end of 2017 to 13,006 million USD in 2018. After 2018, the goodwill value remained relatively stable with a slight decline, ending at 12,912 million USD in 2021.

Trademarks

Trademarks increased substantially from 494 million USD in 2017 to 1,669 million USD in 2018, followed by minor fluctuations between 1,708 million and 1,716 million USD through 2021, indicating stability after the initial growth.

Customer relationships

Customer relationships experienced a sharp rise from 2,026 million USD in 2017 to 9,455 million USD in 2018. From 2018 to 2021, values remained relatively constant around 9,400 to 9,550 million USD, showing sustained valuation post-increase.

Other intangible assets

The "Other" category grew moderately from 118 million USD in 2017 to 314 million USD in 2018, with gradual increases thereafter, reaching 421 million in 2020, before a slight decline to 395 million USD in 2021.

Intangible assets subject to amortization, gross

This asset category rose sharply from 2,638 million USD in 2017 to 11,438 million USD in 2018, followed by steady incremental gains, reaching 11,723 million USD in 2020, and a minor decrease to 11,544 million USD in 2021.

Accumulated amortization

Accumulated amortization increased in magnitude negatively, starting at -1,032 million USD in 2017 and reaching -5,388 million USD by 2021, indicating ongoing amortization expenses over the period.

Intangible assets subject to amortization, net

The net value of amortizable intangible assets increased substantially in 2018 to 9,510 million USD from 1,606 million USD in 2017, followed by a consistent yearly decline to 6,156 million USD in 2021, reflecting amortization effects.

Indefinite-lived intangible assets not subject to amortization

These assets remained nearly constant over the period, at approximately 164 million USD from 2017 through 2019, with a nominal decrease to 161 million USD in 2020 and 2021, indicating stability in non-amortizable intangibles.

Intangible assets (total)

Total intangible assets rose sharply from 1,770 million USD in 2017 to 9,674 million USD in 2018 but then declined consistently to 6,317 million USD by 2021.

Goodwill and intangible assets (total)

The combined value of goodwill and intangible assets surged from 8,843 million USD in 2017 to 22,680 million USD in 2018. This was followed by a steady decline over the subsequent years, ending at 19,229 million USD in 2021, suggesting some impairment, disposals, or amortization impact following the initial sharp increase.

The financial data reveals notable trends in the reported and goodwill-adjusted figures over the five-year period ending December 31, 2021.

Total Assets

The reported total assets increased steadily from $22,555 million in 2017 to $34,427 million in 2021, marking a significant growth of approximately 53% over the period. Adjusted total assets, which exclude goodwill, also showed a positive trend, rising from $15,482 million to $21,515 million. This suggests that although goodwill constitutes a substantial part of reported assets, the company's core asset base has experienced consistent growth.

Stockholders’ Equity

Reported stockholders’ equity displayed strong expansion, growing from $4,610 million in 2017 to $11,599 million in 2021, more than doubling over the timeframe. In contrast, adjusted stockholders’ equity, which accounts for goodwill adjustments, was negative throughout the period but improved from -$2,463 million to -$1,313 million. This persistent negative adjusted equity indicates the presence of significant intangible assets and goodwill that exceed the book equity after adjustment, although the trend toward less negative figures suggests some reduction in impairment or revaluation effects.

Net Income

The reported net income showed considerable volatility. The company experienced a loss of $337 million in 2017 but rebounded with substantial income increases in subsequent years, peaking at $2,069 million in 2019 before declining to $1,006 million in 2021. Adjusted net income figures, which remove goodwill impacts, were positive throughout and closely aligned with reported net income from 2018 onwards. Notably, adjusted net income in 2017 was significantly higher than reported, implying that goodwill impairments affected reported profitability during that year.

Overall, the data indicates that the company expanded its asset base and reported equity notably over the period. However, the negative adjusted equity signifies substantial goodwill or intangible assets on the balance sheet, which may pose risks regarding asset quality. Profitability has been generally positive after 2017, with adjusted figures providing a clearer view of underlying operational earnings irrespective of intangible asset valuations.

Net Profit Margin Trends

Reported net profit margin shows a significant fluctuation over the periods, starting with a negative margin of -4.9% in 2017 and rising to a peak of 18.57% in 2019, before declining to 8.25% by 2021. The adjusted net profit margin exhibits a similar pattern but generally reports higher profitability, particularly evident in 2019 where it reached nearly 20%. There is a notable decline in both reported and adjusted margins after 2019, indicating a reduction in profitability over the subsequent years.

Total Asset Turnover Trends

Reported total asset turnover maintains a relatively stable and slightly increasing trend, edging from 0.3 in 2017 to 0.35 in 2021. Adjusted total asset turnover, however, consistently shows higher efficiency at utilizing assets, ranging from 0.44 in 2017 to 0.57 in 2021. This indicates improved asset utilization over time when excluding goodwill effects.

Financial Leverage Trends

The reported financial leverage ratio progressively decreases from 4.89 in 2017 to 2.97 in 2021, suggesting a reduction in reliance on debt financing or a relative increase in equity. No adjusted financial leverage data is provided for comparison, limiting analysis to reported figures only.

Return on Equity (ROE) Trends

Reported ROE follows a trend similar to net profit margin, beginning with negative returns at -7.31% in 2017, peaking at 20.92% in 2019, and subsequently declining to 8.67% in 2021. No adjusted ROE data is available to provide insight beyond reported figures.

Return on Assets (ROA) Trends

Reported ROA displays a generally positive trend after a negative result in 2017 (-1.49%), increasing through 2019 to 6.13%, followed by a decline to 2.92% in 2021. The adjusted ROA figures are consistently higher than reported values, starting at 6.39% in 2017 and decreasing to 4.68% in 2021, implying better asset profitability when goodwill adjustments are considered.

Overall Insights

The data reveals a strong performance peak in 2019 across profitability and return metrics, with a subsequent downward trend through 2020 and 2021. Asset utilization improves moderately over the entire period, and financial leverage decreases steadily, indicating a move towards lower financial risk. Adjusted values for net profit margin, total asset turnover, and ROA consistently exceed reported figures, highlighting the significant impact of goodwill on reported financial performance. The absence of adjusted financial leverage and ROE limits the completeness of comparative analysis in those areas.

The financial data reveal several notable trends in the company's profitability over the analyzed period.

Reported Net Income (Loss)

The reported net income exhibits significant fluctuation. Starting with a loss of USD 337 million in 2017, the company recorded a substantial turnaround to a positive net income of USD 594 million in 2018. This positive momentum continued, peaking at USD 2,069 million in 2019. However, subsequent years saw a decline to USD 1,219 million in 2020 and further down to USD 1,006 million in 2021.

Adjusted Net Income (Loss)

Adjusted net income presents a smoother and generally higher trajectory compared to reported net income. Beginning at USD 990 million in 2017, it momentarily aligns with the reported figure in 2018 at USD 594 million. Adjusted net income then rises to USD 2,224 million in 2019, exceeding the reported figure for the same year. Similar to the reported data, adjusted net income declines in the following years, reaching USD 1,340 million in 2020 and aligning with the reported figure at USD 1,006 million in 2021.

Reported Net Profit Margin

The reported net profit margin follows a pattern consistent with the net income figures. It starts with a negative margin of -4.9% in 2017, improving to 5.63% in 2018. This margin peaks at 18.57% in 2019, before contracting to 11.42% in 2020 and 8.25% in 2021. The fluctuations indicate strong profitability growth until 2019, followed by a reduction in profit efficiency.

Adjusted Net Profit Margin

Adjusted net profit margin trends are similar but generally indicate higher profitability levels. It begins at 14.4% in 2017, aligns with reported margin at 5.63% in 2018, then rises to 19.96% in 2019, representing the peak margin. Subsequent years show a decline, with margins of 12.56% in 2020 and 8.25% in 2021. This adjusted margin suggests that excluding certain items results in a more favorable profitability perspective in most years, particularly prior to 2020.

Overall, the data indicate a period of significant earnings growth and improved profitability culminating in 2019, followed by a downward trend in net income and profit margins in the years 2020 and 2021. The adjusted figures provide a more optimistic view of profitability by mitigating the effects of non-recurring or extraordinary items, especially evident in the earlier years of the period analyzed.

The analysis of the annual financial data reveals several notable trends in the asset figures and related turnover ratios over the specified period.

Total Assets (Reported)

The reported total assets show a consistent upward trend from 22,555 million US dollars in 2017 to 34,427 million US dollars in 2021. This represents a substantial increase of approximately 52.7% over the five-year period, indicating steady asset growth.

Total Assets (Adjusted for Goodwill)

The adjusted total assets, which exclude goodwill, also exhibit an increasing trajectory, rising from 15,482 million US dollars in 2017 to 21,515 million US dollars in 2021. Although the adjusted figures are considerably lower than the reported totals, reflecting the impact of goodwill, the overall upward trend suggests organic asset base growth and improvements in asset quality.

Total Asset Turnover (Reported)

The reported total asset turnover ratio experienced modest fluctuations, starting at 0.30 in 2017, peaking at 0.35 by 2021, and exhibiting a slight dip to 0.31 in 2020. This indicates a generally stable but slightly improving efficiency in generating revenues from the total asset base over the period, despite occasional volatility.

Total Asset Turnover (Adjusted)

The adjusted total asset turnover ratio is markedly higher than the reported ratio throughout all years, beginning at 0.44 in 2017 and reaching 0.57 in 2021. After stabilizing at 0.54 in 2018 and 2019, it dipped slightly in 2020 to 0.51 before recovering in 2021. This pattern reflects a more efficient use of tangible and goodwill-excluded assets in revenue generation, with an overall improving trend in operational efficiency.

In summary, both reported and adjusted asset values show consistent growth over the period, with assets adjusted for goodwill growing at a slightly slower pace but indicating an increase in tangible asset base. Asset turnover ratios indicate moderate improvements in asset utilization efficiency, with adjusted figures reflecting better performance compared to reported values. The temporary decline in asset turnover during 2020 aligns with broader market conditions and operational challenges, followed by a rebound in 2021 that suggests resilience and adaptability.

The analysis of the annual reported and goodwill adjusted financial data reveals several notable trends and variations over the five-year period ending December 31, 2021.

Total Assets

Reported total assets demonstrate a steady increase from US$ 22,555 million in 2017 to US$ 34,427 million in 2021. This progression indicates an approximately 52.7% growth, suggesting expansion in asset base which may stem from acquisitions, investments, or organic growth over the period.

Adjusted total assets, which exclude goodwill, also display growth but at a more moderate pace, rising from US$ 15,482 million in 2017 to US$ 21,515 million in 2021. The adjusted figures are consistently lower than the reported total assets, highlighting the significance of goodwill in the company’s asset composition.

Stockholders’ Equity

The reported total stockholders’ equity exhibits an increasing trend, rising from US$ 4,610 million in 2017 to US$ 11,599 million in 2021, which reflects strengthening equity capital and possibly retained earnings or capital inflows.

Conversely, the adjusted total stockholders’ equity, which accounts for goodwill adjustments, remains negative throughout the period albeit with a decreasing negative balance from -US$ 2,463 million in 2017 to -US$ 1,313 million in 2021. This persistent negative adjusted equity suggests that excluding goodwill, liabilities exceed adjusted assets, raising concerns about capital adequacy from a tangible equity perspective.

Financial Leverage

The reported financial leverage ratio, defined likely as the ratio of total assets to equity, shows a declining trend from 4.89 in 2017 down to 2.97 in 2021. This decline indicates a reduction in leverage over time, suggesting that the company may have strengthened its equity position relative to its total assets or reduced reliance on debt financing.

Data for adjusted financial leverage is missing, which limits analysis of leverage excluding goodwill impacts.

In summary, the entity’s asset base and reported equity have grown steadily from 2017 to 2021, accompanied by a decline in financial leverage, indicative of improved financial stability. However, the adjusted equity being negative throughout, despite improvements, points to an ongoing imbalance when goodwill is excluded, highlighting the potential risks related to intangible asset valuation and the underlying tangible net worth of the firm.

Net Income Trends

The reported net income (loss) available showed significant fluctuations over the period. Initially, there was a substantial loss of -$337 million in 2017, which then shifted to a positive range with $594 million in 2018, increasing sharply to $2,069 million in 2019. Following this peak, net income decreased to $1,219 million in 2020 and further to $1,006 million in 2021. The adjusted net income values followed a similar pattern, albeit starting from a positive $990 million in 2017. Adjusted net income peaked in 2019 at $2,224 million and then declined in subsequent years, mirroring the reported net income trend.

Stockholders' Equity Analysis

Reported total stockholders' equity exhibited a consistent upward trend throughout the observed years. Beginning at $4,610 million in 2017, equity more than doubled by 2018 to $8,386 million, then continued to increase annually, reaching $11,599 million by 2021. Conversely, the adjusted total stockholders’ equity showed negative values for all years reported. Although the adjusted equity figures improved over time, shifting from -$2,463 million in 2017 to -$1,313 million in 2021, they remained substantially negative, indicating that the goodwill adjustments had a material adverse impact on equity levels.

Return on Equity (ROE)

The reported ROE mirrored the net income and equity trends. It began with a negative return of -7.31% in 2017, turning positive in 2018 at 7.08%. ROE then peaked sharply at 20.92% in 2019 before declining to 11.65% in 2020 and further to 8.67% in 2021. There are no available adjusted ROE values, preventing a comparative assessment in this area. The declining ROE after 2019 suggests a reduction in profitability relative to equity despite the continuing upward trend in equity itself.

Net Income

The reported net income available to the company experienced significant volatility over the observed periods. Initially, there was a loss of $337 million in 2017, followed by a sharp recovery to a profit of $594 million in 2018. This upward trend continued markedly in 2019, reaching a peak of $2,069 million. However, the subsequent two years saw declines to $1,219 million in 2020 and further down to $1,006 million in 2021. The adjusted net income mirrored this pattern but with higher profitability figures initially; it started at $990 million in 2017, remained stable in 2018, peaked higher at $2,224 million in 2019, and then similarly declined over the next two years to $1,006 million by 2021.

Total Assets

The reported total assets showed a consistent upward trajectory throughout the period, increasing from $22,555 million in 2017 to $34,427 million by the end of 2021. Adjusted total assets followed a similar but more conservative growth path, rising steadily from $15,482 million in 2017 to $21,515 million in 2021. This suggests an ongoing asset base expansion, though the adjustments significantly lower the asset base when goodwill and related items are accounted for.

Return on Assets (ROA)

Reported ROA values were initially negative in 2017 at -1.49%, then improved substantially in 2018 to 1.82%, peaking at 6.13% in 2019. The subsequent two years showed a decline in ROA to 3.58% in 2020 and 2.92% in 2021, indicating reduced asset profitability. Adjusted ROA showed a higher baseline and greater volatility, starting at 6.39% in 2017, dropping to 3.04% in 2018, then surging to 10.75% in 2019. After this peak, adjusted ROA declined to 6.38% in 2020 and 4.68% in 2021. The adjusted figures consistently show greater profitability and sharper fluctuations compared to the reported metrics.

Summary Insights

The financial data reveals a pattern of significant improvement in profitability from 2017 through 2019, followed by a gradual decline in net income and returns on assets in 2020 and 2021. Asset growth remained steady and linear throughout the period. The difference between reported and adjusted figures, particularly in income and ROA, highlights the material effect of adjustments presumably related to goodwill and other non-operational factors. The peak profitability in 2019 across both reported and adjusted measures contrasts with the softer performance in the last two years, suggesting challenges impacting earnings and returns despite continued asset growth.