WMG Q2 REVENUE UP
NEARLY 7% TO $1.49B

WMG delivered a largely upbeat earnings report for its fiscal Q2. Happily, the Bunny, unlike the other two members of the Big 3, reports its results in dollars, not euros or yen, so there’s no pesky currency conversion involved in stitching together this post.

For the three months ending 3/31, total revenue increased 6.8% to $1.49 billion, and net income was $96m, versus $37m in Q2 2023. Adjusted OIBDA increased 9% to $312m, up from $286m a year earlier, while cash used in operating activities increased to $31m, compared to $6m in the prior-year quarter. But operating income decreased 4% or $5m to $119m, primarily due to factors affecting adjusted OIBDA.

“This quarter we saw a healthy, dynamic mix of hits across a range of genres, geographies and generations,” WMG ruler Robert Kyncl enthused. “With our commitment to artist and songwriter development as our guiding principle, we continue to discover great talent, build sustainable careers, champion the value of music and grow the catalog of tomorrow. We are positioning WMG for long-term growth and look forward to delivering successful music in the second half of 2024 and beyond.”

“Our performance in the quarter was driven by an acceleration in recorded-music subscription streaming growth and continued momentum in music publishing,” CFO Bryan Castellani added. “Encouraged by the continued growth in engagement and value of music, we remain focused on delivering on our strategy and driving long-term shareholder value.”

As with the prior quarter, recorded-music digital revenue growth was unfavorably impacted by the termination of the distribution agreement with BMG, which resulted in $22m less revenue year over year, and a $4m unfavorable impact in recorded-music streaming revenue due to a renewal with one of the company’s digital partners. Excluding the BMG termination and the digital-license renewal, total revenue was up 8.8% (or 9.0% in constant currency).

Digital revenue increased 9.9% (or 10.2% in constant currency), while streaming revenue rose 10.7% (or 11.1% in constant currency). Adjusted for the impact of the BMG termination and the digital-license renewal, recorded-music streaming revenue was up 10.5% (or 11.1% in constant currency).

Music-publishing streaming revenue increased 30.3% (29.4% in constant currency). Revenue increases were also driven by growth in recorded-music licensing revenue and music-publishing performance and sync revenue, partially offset by less revenue from recorded-music physical product, artist services and expanded rights.

Touting WMG's many homegrown acts, including Bruno Mars, Ed Sheeran, Cardi B and Dua Lipa, Kyncl compared them to new and rising stars like Zach Bryan, Benson Boone and Teddy Swims, who are now crafting similar artist-development success stories.

Kyncl added that WMG is "building solutions in house" to identify and sign emerging songwriters while "staying vigilant about M&A opportunities that could accelerate our capabilities."

Lastly, although the "majority" of the restructuring plan revealed during WMG's prior earnings call has already been implemented, Kyncl said that "the full savings will not be realized until the end of fiscal 2025."

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