Common-Size Income Statement
Quarterly Data
Warner Bros. Discovery Inc., common-size consolidated income statement (quarterly data)
Based on: 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
The financial performance exhibits a significant transition in revenue composition and profitability margins, culminating in a period of heightened volatility and operational loss during 2022. While the company maintained relatively stable margins for several years, the most recent quarters indicate a structural shift in the business model and a substantial increase in the cost of revenues.
- Revenue Stream Evolution
- A fundamental shift in revenue sources is evident. Advertising revenue, which historically fluctuated between 42% and 56% of total revenues from 2017 through 2021, experienced a sharp decline starting in early 2022, falling to 20.79% by September 30, 2022. Simultaneously, a new "Content" revenue stream emerged in early 2022, rapidly growing from 10.22% in March to 25.77% in September. Distribution revenue remained more stable, though it trended upward to 50.80% in the final period analyzed.
- Gross Profitability and Cost Dynamics
- Gross profit margins were historically robust, typically ranging between 60% and 68%. However, a severe contraction occurred in 2022. The costs of revenues, excluding depreciation and amortization, surged from an average of approximately 35% in prior years to a peak of 67.42% in June 2022. This spike resulted in gross profit margins dropping to 32.58% in June 2022, before recovering slightly to 42.72% in September 2022.
- Operating Expense Trends
- Selling, general, and administrative expenses remained relatively consistent, generally oscillating between 22% and 37% of revenues. Conversely, depreciation and amortization showed a steady upward trajectory, increasing from approximately 5% of revenues in 2017 to over 22% by September 2022, indicating a growth in the company's capital-intensive asset base. Additionally, significant restructuring and other charges emerged in mid-2022, reaching 15.48% of revenues in the final quarter.
- Operating and Net Income Volatility
- Operating income was generally positive and stable until the 2022 downturn, with the exception of a major impairment in December 2017 which caused a temporary collapse in profitability. The transition in 2022 led to substantial operating losses, reaching -37.03% of revenues in June 2022. This trend extended to the bottom line, where net income available to the company swung from positive margins in previous years to significant losses of -34.78% and -23.50% in the last two quarters of the period.
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