Core Insights - Google and Apple are integrating music-focused generative AI features into their consumer applications, highlighting the mainstream adoption of advanced AI tools [1] Group 1: Google Developments - Google's Gemini AI assistant can create 30-second music tracks based on user-uploaded text, photos, or videos using the Lyria 3 model, available to users over 18 in multiple languages [2] - The Gemini AI will also generate custom cover art through its Nano Banana model, enhancing the sharing experience for users [3] - Google aims to strengthen its consumer offerings amid competition with OpenAI's ChatGPT, following positive reception of its Gemini 3 AI model [4] - The AI-driven music creation feature will have usage limits, allowing free users to generate 10 tracks per day, while paying users can create between 20 to 100 tracks daily based on their subscription tier [7] - Google has implemented safeguards to prevent the AI from using specific artists' content, ensuring compliance with intellectual property and privacy regulations [9] Group 2: Apple Developments - Apple is introducing a feature called Playlist Playground in Apple Music, enabling users to create playlists from text prompts, which will include cover art, descriptions, and 25 songs [5] - This new feature is part of iOS 26.4, currently in beta, and will be more widely available in the spring [5] - Apple is working to enhance its AI capabilities across its applications, although updates to its Siri virtual assistant may face delays [6] Group 3: Industry Context - The music industry has expressed concerns regarding generative AI tools, viewing them as potential threats to business and intellectual property [8] - Major music companies have taken legal action against AI startups for copyright infringement, with some reaching settlements to ensure proper licensing and controls [8]

Core Viewpoint - Warner Music has entered into licensing agreements with AI music platforms Suno and Udio, set to be implemented in 2026, indicating a strategic shift towards AI-driven music creation and distribution [1] Group 1: Licensing Agreements - Suno plans to launch a new generation AI model trained on licensed data in 2026, while retiring its existing model [1] - Suno will acquire Warner's concert information service platform Songkick and operate it independently [1] - Udio is set to launch a generative AI music creation service platform in 2026, aimed at developing compliant AI-assisted creative tools [1] Group 2: Cost Management and Investment Strategy - The company announced a new round of layoffs and cost-cutting measures in 2025, targeting savings of approximately $300 million [1] - The saved funds will be reinvested into A&R (Artist and Repertoire) and acquisition activities to optimize the long-term business structure [1] - These adjustments may continue to impact operational direction into 2026 [1]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-32502 Warner Music Group Corp. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 1 ...

Group 1 - The article does not provide any relevant content regarding company or industry insights [1]

Core Insights - Warner Music Group Corp. (WMG) reported a revenue of $1.84 billion for the quarter ended December 2025, reflecting a year-over-year increase of 10.4% and a surprise of +3.95% over the Zacks Consensus Estimate of $1.77 billion [1] - The earnings per share (EPS) for the quarter was $0.33, down from $0.45 in the same quarter last year, resulting in an EPS surprise of -16.69% compared to the consensus estimate of $0.40 [1] Revenue Breakdown - Total Recorded Music revenue reached $1.48 billion, exceeding the two-analyst average estimate of $1.43 billion [4] - Music Publishing revenue was $362 million, surpassing the two-analyst average estimate of $343.46 million [4] - Revenue from Recorded Music Digital was $976 million, compared to the average estimate of $944.83 million [4] - Revenue from Recorded Music Physical was $152 million, slightly below the average estimate of $157.21 million [4] - Total revenue from Recorded Music (Digital and Physical combined) was $1.13 billion, exceeding the two-analyst average estimate of $1.1 billion [4] - Music Publishing revenue from Performance was $64 million, above the average estimate of $58.25 million [4] - Music Publishing revenue from Synchronization was $60 million, significantly higher than the average estimate of $41.56 million [4] Stock Performance - Over the past month, shares of Warner Music Group have returned -5.3%, while the Zacks S&P 500 composite has changed by +0.5% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

分组1 - Warner Music Group Corp. reported quarterly earnings of $0.33 per share, missing the Zacks Consensus Estimate of $0.40 per share, and down from $0.45 per share a year ago, representing an earnings surprise of -16.69% [1] - The company posted revenues of $1.84 billion for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 3.95%, compared to year-ago revenues of $1.67 billion [2] - Warner Music Group shares have declined approximately 8.1% since the beginning of the year, while the S&P 500 has gained 0.5% [3] 分组2 - The current consensus EPS estimate for the upcoming quarter is $0.31 on revenues of $1.59 billion, and for the current fiscal year, it is $1.55 on revenues of $6.99 billion [7] - The Zacks Industry Rank for Film and Television Production and Distribution is currently in the bottom 7% of over 250 Zacks industries, indicating potential challenges for the sector [8] - The estimate revisions trend for Warner Music Group was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, suggesting it is expected to perform in line with the market in the near future [6]

Financial Data and Key Metrics Changes - Total revenue increased by 7%, driven by a 9% growth in recorded music subscription streaming on an adjusted basis [5][20] - Total adjusted OIBDA rose by 22%, with a margin increase of over 300 basis points [20][28] - Operating cash flow grew by 33%, achieving nearly 100% conversion of adjusted OIBDA [20][28] - Cash balance increased by more than $200 million since the last quarter, reaching $751 million [21] Business Line Data and Key Metrics Changes - Recorded music streaming saw an 11% growth in subscription streaming, while ad-supported streaming grew by 4% [20] - Physical sales declined by 11% due to tough comparisons from the previous year [20] - Artist services and expanded rights revenue increased by 13%, primarily driven by concert promotion revenue [20] - Music publishing revenue grew by 9%, with a 15% growth when adjusted for notable items [20] Market Data and Key Metrics Changes - U.S. streaming market share grew by approximately 1 percentage point year-over-year, with a 3 percentage point increase on Spotify's Top 200 chart [7] - Internationally, the company achieved number one hits in multiple countries, including France, Italy, and China [8] Company Strategy and Development Direction - The company focuses on three strategic priorities: growing market share, increasing the value of music, and driving efficiency [5][11] - AI is being leveraged to enhance artist discovery, marketing, and operational efficiency [12][27] - The company is committed to ethical AI practices, ensuring artists have control over their likeness and voice in AI-generated content [15][36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong momentum and a healthy industry outlook [16][30] - The company anticipates continued growth driven by strategic investments, including M&A and AI partnerships [21][30] - Management highlighted the importance of adapting to market changes and maintaining flexibility in capital allocation [68][79] Other Important Information - The company plans to file its Form 10-Q on February 9 [3] - Notable items impacting financial results were disclosed, with an estimated $10 million impact for the remainder of fiscal 2026 [29] Q&A Session Summary Question: Can you expand on your AI philosophy and the financial impact of AI deals? - Management emphasized that AI initiatives align with their three strategic priorities and are designed to protect artists' rights while creating value [34][40] - The financial impact from AI partnerships is expected to be material, with revenue sharing structured to grow alongside partner platforms [42][43] Question: What is the outlook for paid streaming growth and potential growth accelerants? - Management noted that subscription streaming growth is evolving to include both volume and value, with opportunities for super premium tiers [49][50] Question: How is the company driving consistent market share growth? - Management attributed growth to a broad-based strategy, including restructuring, technology investments, and artist development [55][56] Question: Can you provide details on capital allocation and M&A plans? - The company is focusing on a portfolio approach to capital allocation, prioritizing high-potential deals and expanding its joint venture capacity [67][70]

Financial Data and Key Metrics Changes - Total revenue increased by 7%, driven by a 9% growth in recorded music subscription streaming on an adjusted basis [5][20] - Total adjusted OIBDA rose by 22%, with a margin increase of 310 basis points [5][20] - Operating cash flow grew by 33%, achieving nearly 100% conversion of adjusted OIBDA [20][28] - Cash balance increased by over $200 million since the last quarter, reaching $751 million [21] Business Line Data and Key Metrics Changes - Recorded music streaming saw an 11% growth in subscription streaming, or 9% when adjusted for notable items [20] - Ad-supported streaming grew by 4%, while physical sales declined by 11% [20] - Artist services and expanded rights revenue increased by 13%, primarily due to concert promotion revenue in France [20] - Music publishing revenue grew by 9%, with a 15% growth when adjusted for notable items [20][86] Market Data and Key Metrics Changes - U.S. streaming market share grew by approximately one percentage point year-over-year, with a three percentage point increase on Spotify's Top 200 chart [7] - Internationally, the company achieved number one hits in multiple countries, including France, Italy, and China [8] Company Strategy and Development Direction - The company focuses on three strategic priorities: growing market share, increasing the value of music, and driving efficiency [5][11] - AI is being leveraged to enhance artist discovery, marketing, and operational efficiency [12][15] - The company is committed to ethical AI practices, ensuring artists have the right to opt-in for the use of their likeness in AI-generated content [15][36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong momentum and a healthy industry outlook [16][30] - The company anticipates continued growth driven by strategic investments and favorable DSP agreements [30][50] - Management highlighted the importance of ethical AI deployment to protect artists while creating value [15][41] Other Important Information - The company has renewed its deal with TikTok, resulting in improved deal economics [11] - A significant increase in joint venture capacity with Bain from $1.2 billion to approximately $1.65 billion was announced [23][70] Q&A Session Summary Question: Can you expand on your AI philosophy and the financial impact of AI deals? - The company emphasizes ethical models in AI partnerships, ensuring proper licensing and artist rights [33][36] - Financially, the company expects material impacts from AI deals, with revenue sharing based on platform growth [42][43] Question: What is the outlook for paid streaming growth and potential growth accelerants? - The company is optimistic about transitioning to volume and value-led growth in streaming, with AI expected to introduce super premium tiers [49][50] Question: How is the company achieving consistent market share growth? - The company attributes growth to broad-based improvements across regions and business units, supported by strategic restructuring and investments in technology [55][56] Question: Can you provide insights on the performance of Music Publishing? - Music Publishing has seen double-digit growth, with a focus on A&R strategy and expansion in developing regions [86] Question: What is the response from artists regarding AI opportunities? - Artist engagement with AI initiatives has been high, with many expressing interest in participating [82][87]

Financial Data and Key Metrics Changes - Total revenue increased by 7%, driven by a 9% growth in recorded music subscription streaming on an adjusted basis [4][18] - Adjusted OIBDA rose by 22%, with a margin increase of over 300 basis points [18] - Operating cash flow grew by 33%, achieving nearly 100% conversion of adjusted OIBDA [18][19] - Cash balance increased by more than $200 million to $751 million [19] Business Line Data and Key Metrics Changes - Recorded music streaming saw subscription growth of 11% (9% adjusted for notable items) and ad-supported streaming grew by 4% [18] - Physical sales declined by 11% due to tough comparisons from the previous year [18] - Artist services and expanded rights revenue increased by 13%, primarily from concert promotion [18] - Music publishing revenue grew by 9%, with a 15% increase when adjusted for notable items [18] Market Data and Key Metrics Changes - U.S. streaming market share grew by approximately 1 percentage point year-over-year, with a 3 percentage point increase on Spotify's Top 200 chart [5] - Internationally, the company achieved number one hits in multiple countries, including France, Italy, and China [6] Company Strategy and Development Direction - The company focuses on three strategic priorities: growing market share, increasing the value of music, and driving efficiency [4][9] - AI is being leveraged to enhance artist discovery, marketing, and operational efficiency [10][12] - The company is committed to ethical AI practices, ensuring artists have control over their likeness and voice in AI-generated content [12][34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong momentum and a healthy industry outlook [13][27] - The company anticipates continued growth driven by strategic investments and favorable DSP agreements [27][46] - Management highlighted the importance of adapting to market changes and leveraging new technologies for growth [36][46] Other Important Information - The company has renewed its deal with TikTok, resulting in improved deal economics [9] - A significant increase in the joint venture capacity with Bain from $1.2 billion to approximately $1.65 billion was announced [20][68] Q&A Session Summary Question: Can you expand on your AI philosophy and the financial impact of AI deals? - Management emphasized that AI initiatives align with their three strategic priorities and are designed to protect artists while creating value [31][34] - The financial impact from AI partnerships is expected to be material, with revenue sharing based on consumption [40][41] Question: What is the outlook for paid streaming growth and DSP deals? - Management noted that they are seeing volume-led subscription growth evolve into value-led growth, with opportunities for super premium tiers [46][47] Question: How is the company driving consistent market share growth? - Management attributed growth to a broad-based strategy, including restructuring and reinvestment in technology and A&R [52][53] Question: Can you provide details on margin targets and cash flow conversion? - Management indicated that margin expansion is driven by cost savings, high-margin streaming growth, and AI revenue, with a target of mid- to high-20s percentage margins [74][75]

FISCAL Q1 2026 Earnings Snapshot © Warner Music Group 2026 Confidential 1 Non-GAAP Financial Measures This presentation contains certain non-GAAP financial measures. We provide reconciliations to these non-GAAP financial measures to the most directly comparable GAAP financial measures in our earnings press release, which can be found on our website at investors.wmg.com. © Warner Music Group 2026 Confidential This presentation is a supplement to, and should be read in conjunction with, Warner Music Group's e ...