Warner Music Group’s revenue surges past $6bn

During the fiscal year, revenue – encompassing recorded music, music publishing and other activities – was up 3.9% year-on-year (at constant currency), passing $6bn for the first time in WMG’s history.

Over the three months, revenue was up 5.9% (or 4.5% in constant currency). Digital revenue increased 8.0% (or 7.1% in constant currency), which includes the impact in the prior-year quarter of $38m in downloads and other digital revenue from the settlement of certain copyright infringement. Streaming revenue increased 12.6% (or 11.6% in constant currency). Recorded music streaming revenue increased by 9.6% (or 8.9% in constant currency).

Growth in recorded music streaming revenue increased due to a stronger release schedule and growth in ad-supported revenue, which includes the impact of the company’s TikTok renewal. Music publishing streaming revenue increased by 28.4% (or 25.8% in constant currency), which includes a benefit in the quarter and the prior-year quarter of $17m and $3m, respectively, resulting from a ruling by the Copyright Royalty Board in Phonorecords III upholding higher percentage of revenue US mechanical royalty rates.

Revenue increases in the quarter were also driven by growth in recorded music licensing and physical revenue and music publishing mechanical, performance and synchronisation revenue. Recorded music artist services and expanded-rights revenue were lower on an as-reported basis and in constant currency. Excluding the copyright settlement and the CRB Rate Benefit, revenue increased by 7.8% (or 6.3% in constant currency).

Operating income was $212m compared to $163m in the prior-year quarter. OIBDA was $291m, compared to $245m in the prior-year quarter, an increase of 18.8% (or 16.9% in constant currency), and OIBDA margin increased 1.9 percentage points to 18.3% from 16.4% in the prior-year quarter (the same in constant currency).

The increases in operating income, OIBDA and OIBDA margin were primarily due to strong operating performance, the favourable impact of exchange rates and $9m of savings from the previously announced restructuring plan partially offset by revenue mix and $10m of incremental investment in technology in the quarter and $29m from the Copyright Settlement in the prior-year quarter.

“We delivered on our promise of second-half improvement, and reached over $6 billion in annual revenue for the first time in WMG’s history,” Warner Music Group CEO Robert Kyncl said. “As the music ecosystem is recognising the value of premium content and emerging markets continue to gain traction, our industry is healthy and growing.  With these tailwinds at our back, we’ve been working hard to build a WMG that will excel in the music industry of tomorrow and look forward to bringing you incredible music in 2024 from our extraordinary artists and songwriters.”

WMG financial year highlights:

• Eclipsed $6bn of total revenue for the first time in WMG’s history.
• Acceleration in Q4 streaming growth driven by release slate and ad-supported improvement.
• Continued strength in music publishing with double-digit revenue growth for the quarter and full year.
• Strong margin expansion outperformed full-year expectations.
• Achieved robust full-year operating cash flow conversion of 56% in line with target.

Financial highlights for the three months ended 30 September 2023:

• Total revenue increased 6%, or 5% in constant currency.
• Digital revenue increased by 8%, or 7% in constant currency.
• Net income was $154m versus $150m in the prior-year quarter.
• OIBDA increased 19% to $291m versus $245m in the prior-year quarter or 17% in constant currency.
• Adjusted OIBDA increased 20% to $317m versus $265m in the prior-year quarter or 18% in constant currency.
• Cash from operating activities decreased 17% to $338m from $406m in the prior-year quarter.

Financial highlights for the 12 months ended 30 September 2023:

• Total revenue increased by 2% or 4% in constant currency.
• Digital revenue increased by 3% or 5% in constant currency.
• Net income was $439m versus $555m in the prior year.
• OIBDA increased 7% to $1.1m versus $1m in the prior year or 10% in constant currency.
• Adjusted OIBDA increased 7% to $1.2m versus $1m in the prior year or 10% in constant currency.
• Cash provided by operating activities decreased 7% to $687m from $742m in the prior year.