PART I. FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Presents unaudited condensed consolidated financial statements, including balance sheets, operations, comprehensive income, cash flows, equity, and detailed notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and equity increased, while liabilities also rose, primarily due to debt and accrued royalties | Metric | March 31, 2023 (in millions) | September 30, 2022 (in millions) | Change (in millions) | | :--------------------------------- | :----------------------------- | :------------------------------- | :------------------- | | Total Assets | $8,010 | $7,828 | $182 | | Total Liabilities | $7,744 | $7,660 | $84 | | Total Warner Music Group Corp. Equity | $252 | $152 | $100 | | Cash and equivalents | $601 | $584 | $17 | | Accounts receivable, net | $1,017 | $984 | $33 | | Goodwill | $1,960 | $1,920 | $40 | | Accrued royalties | $2,057 | $1,918 | $139 | | Long-term debt | $3,986 | $3,732 | $254 | | Deferred revenue | $311 | $423 | $(112) | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Revenue increased slightly, but net income significantly decreased due to higher costs and expenses | Metric (in millions) | 3 Months Ended Mar 31, 2023 | 3 Months Ended Mar 31, 2022 | 6 Months Ended Mar 31, 2023 | 6 Months Ended Mar 31, 2022 | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Revenue | $1,399 | $1,376 | $2,887 | $2,990 | | Total costs and expenses | $(1,275) | $(1,210) | $(2,539) | $(2,585) | | Operating income | $124 | $166 | $389 | $405 | | Net income attributable to Warner Music Group Corp. | $34 | $92 | $156 | $279 | | Class A – Basic and Diluted EPS | $0.06 | $0.18 | $0.30 | $0.53 | | Class B – Basic and Diluted EPS | $0.06 | $0.18 | $0.30 | $0.53 | - Net income attributable to Warner Music Group Corp. decreased by **63%** for the three months ended March 31, 2023, and by **44%** for the six months ended March 31, 2023, compared to the prior year periods[12](index=12&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Total comprehensive income decreased, influenced by foreign currency adjustments and derivative financial instruments | Metric (in millions) | 3 Months Ended Mar 31, 2023 | 3 Months Ended Mar 31, 2022 | 6 Months Ended Mar 31, 2023 | 6 Months Ended Mar 31, 2022 | | :------------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income | $37 | $92 | $161 | $280 | | Foreign currency adjustment | $19 | $(25) | $91 | $(50) | | Deferred (loss) gain on derivative financial instruments | $(4) | $14 | $(5) | $21 | | Total comprehensive income attributable to Warner Music Group Corp. | $49 | $81 | $242 | $250 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased, investing cash flow significantly decreased, and financing activities shifted to net cash usage | Metric (in millions) | 6 Months Ended Mar 31, 2023 | 6 Months Ended Mar 31, 2022 | Change (in millions) | | :------------------------------------ | :-------------------------- | :-------------------------- | :------------------- | | Net cash provided by operating activities | $203 | $173 | $30 | | Net cash used in investing activities | $(51) | $(649) | $598 | | Net cash (used in) provided by financing activities | $(143) | $363 | $(506) | | Cash and equivalents at end of period | $601 | $385 | $216 | - Cash used in investing activities decreased significantly by **$598 million**, primarily due to reduced investments and acquisitions and proceeds from divestitures[17](index=17&type=chunk) - Financing activities shifted from providing **$363 million** in cash to using **$143 million**, mainly due to higher payments for deferred consideration and dividends, and reduced debt issuance proceeds[17](index=17&type=chunk) [Condensed Consolidated Statements of Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) Total equity increased, driven by net income and other comprehensive income, partially offset by dividends | Metric (in millions) | Balance at Sep 30, 2022 | Net Income | Other Comprehensive Income | Dividends Paid | Stock-based Compensation | Balance at Mar 31, 2023 | | :--------------------------------- | :---------------------- | :--------- | :------------------------- | :------------- | :----------------------- | :---------------------- | | Total Warner Music Group Corp. Equity | $152 | $156 | $86 | $(167) | $25 | $252 | - The company paid **$0.32 per share** in dividends for the six months ended March 31, 2023[18](index=18&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Details business, accounting policies, financial instruments, and segment performance, with updates on fiscal year, restructuring, and debt - The company changed its fiscal year from a 52-53-week calendar to a reporting calendar ending on the last day of the calendar quarter, effective for the 2023 fiscal year. The prior year's six-month period included an additional week, contributing approximately **$73 million** in revenue, primarily from Recorded Music streaming[29](index=29&type=chunk)[30](index=30&type=chunk) - A restructuring plan was announced in March 2023, aiming to reduce headcount by approximately **270 people (4% of total headcount)**, incurring **$41 million** in severance costs. This is expected to generate **$20 million** in cost savings in FY23 and **$49 million** annually in FY24[70](index=70&type=chunk)[71](index=71&type=chunk)[138](index=138&type=chunk) - Executive transition costs for the former CEO and departing CFO amounted to approximately **$3 million** in severance, plus **$12 million** in non-cash stock-based compensation expense for the former CEO due to accelerated vesting[79](index=79&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) [Description of Business](index=11&type=section&id=Description%20of%20Business) Warner Music Group operates in Recorded Music and Music Publishing, focusing on artist development, marketing, and intellectual property - The company's business is classified into two fundamental operations: Recorded Music and Music Publishing[24](index=24&type=chunk) - Recorded Music involves discovering and developing artists, and marketing, promoting, distributing, selling, and licensing their music[25](index=25&type=chunk) - Music Publishing focuses on generating revenue from the use of musical compositions, promoting, placing, marketing, and administering the creative output of songwriters[26](index=26&type=chunk) [Summary of Significant Accounting Policies](index=11&type=section&id=Summary%20of%20Significant%20Accounting%20Policies) Interim financial statements follow U.S. GAAP, with a fiscal year-end change impacting comparability and recent ASU adoptions - Interim financial statements are prepared under U.S. GAAP for interim information, not full annual disclosures[27](index=27&type=chunk) - Effective for fiscal year 2023, the company changed its fiscal year end to September 30, from a modified 52-53-week calendar. The six months ended March 31, 2022, included an extra week, boosting revenue by approximately **$73 million**, primarily in Recorded Music streaming[29](index=29&type=chunk)[30](index=30&type=chunk) - The company adopted ASU 2020-04 and ASU 2021-01 regarding Reference Rate Reform (LIBOR transition) and is evaluating ASU 2023-01 for leases under common control, not expecting a material financial impact from the former[37](index=37&type=chunk)[38](index=38&type=chunk) [Earnings per Share](index=13&type=section&id=Earnings%20per%20Share) Basic and diluted EPS for both Class A and Class B common stock decreased for the three and six months ended March 31, 2023 | Metric | 3 Months Ended Mar 31, 2023 | 3 Months Ended Mar 31, 2022 | 6 Months Ended Mar 31, 2023 | 6 Months Ended Mar 31, 2022 | | :------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income attributable to Warner Music Group Corp. | $34 | $92 | $156 | $279 | | Class A – Basic and Diluted EPS | $0.06 | $0.18 | $0.30 | $0.53 | | Class B – Basic and Diluted EPS | $0.06 | $0.18 | $0.30 | $0.53 | [Revenue Recognition](index=15&type=section&id=Revenue%20Recognition) Details revenue breakdown by segment and type, highlighting digital revenue and an increase in deferred revenue from fixed fees | Revenue Type (in millions) | 3 Months Ended Mar 31, 2023 | 3 Months Ended Mar 31, 2022 | 6 Months Ended Mar 31, 2023 | 6 Months Ended Mar 31, 2022 | | :------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Digital | $796 | $804 | $1,599 | $1,674 | | Physical | $118 | $122 | $251 | $317 | | Artist services and expanded-rights | $131 | $141 | $337 | $373 | | Licensing | $98 | $80 | $195 | $169 | | Total Recorded Music | $1,143 | $1,147 | $2,382 | $2,533 | | Performance (Music Publishing) | $45 | $36 | $90 | $74 | | Digital (Music Publishing) | $146 | $127 | $295 | $260 | | Mechanical (Music Publishing) | $16 | $13 | $30 | $27 | | Synchronization (Music Publishing) | $46 | $50 | $85 | $92 | | Other (Music Publishing) | $4 | $4 | $7 | $6 | | Total Music Publishing | $257 | $230 | $507 | $459 | | Total Revenues | $1,399 | $1,376 | $2,887 | $2,990 | - Deferred revenue increased by **$225 million** during the six months ended March 31, 2023, from cash received for fixed fees and minimum guarantees[43](index=43&type=chunk) | Remaining Performance Obligations (in millions) | Rest of FY23 | FY24 | FY25 | Thereafter | Total | | :------------------------------------ | :----------- | :--- | :--- | :--------- | :---- | | Total | $350 | $450 | $6 | $2 | $808 | [Acquisition of 300 Entertainment](index=16&type=section&id=Acquisition%20of%20300%20Entertainment) The 300 Entertainment acquisition, finalized in December 2021, saw a minor goodwill adjustment in Q1 FY23 - The acquisition of 300 Entertainment was finalized for **$394 million**, with a net increase of approximately **$3 million** to goodwill during the three months ended December 31, 2022[46](index=46&type=chunk) [Comprehensive Income](index=16&type=section&id=Comprehensive%20Income) Changes in accumulated other comprehensive loss reflect foreign currency translation gains and deferred losses on derivatives | Component (in millions) | Balances at Sep 30, 2022 | Other Comprehensive Income (Loss) | Balances at Mar 31, 2023 | | :-------------------------------- | :----------------------- | :-------------------------------- | :----------------------- | | Foreign Currency Translation Loss | $(358) | $91 | $(267) | | Deferred (Losses) On Derivative Financial Instruments | $13 | $(5) | $8 | | Accumulated Other Comprehensive Loss, net | $(347) | $86 | $(261) | [Goodwill and Intangible Assets](index=16&type=section&id=Goodwill%20and%20Intangible%20Assets) Goodwill increased due to foreign currency and acquisitions, with no impairment indicators identified | Metric (in millions) | Balances at Sep 30, 2022 | Acquisitions | Other Adjustments (FX) | Balances at Mar 31, 2023 | | :------------------- | :----------------------- | :----------- | :--------------------- | :----------------------- | | Goodwill | $1,920 | $3 | $37 | $1,960 | | Intangible Asset Type (in millions) | March 31, 2023 (Net) | September 30, 2022 (Net) | | :---------------------------------- | :------------------- | :----------------------- | | Intangible assets subject to amortization | $2,232 | $2,239 | | Intangible assets not subject to amortization | $150 | $145 | | Total net intangible assets | $2,382 | $2,384 | - No indicators of goodwill impairment were identified during the current period[51](index=51&type=chunk) [Debt](index=17&type=section&id=Debt) Total long-term debt increased due to new facilities, with the weighted-average interest rate rising to 4.0% | Debt Type (in millions) | March 31, 2023 | September 30, 2022 | | :------------------------------------ | :------------- | :----------------- | | Senior Term Loan Facility due 2028 | $1,295 | $1,145 | | 2.750% Senior Secured Notes due 2028 | $354 | $318 | | 3.750% Senior Secured Notes due 2029 | $540 | $540 | | 3.875% Senior Secured Notes due 2030 | $535 | $535 | | 2.250% Senior Secured Notes due 2031 | $486 | $435 | | 3.000% Senior Secured Notes due 2031 | $800 | $800 | | Term Loan Mortgage | $19 | $0 | | Total long-term debt, net | $3,986 | $3,732 | - Acquisition Corp. borrowed an additional **$150 million** under the Senior Term Loan Facility in November 2022 to fund deferred payment obligations for prior acquisitions and for general corporate purposes[57](index=57&type=chunk) - A new **$19 million** Term Loan Mortgage, secured by real estate, was entered into in January 2023, bearing interest at 30-day SOFR plus 1.40%[58](index=58&type=chunk) - The Revolving Credit Agreement was amended in March 2023 to replace LIBOR-based rates with SOFR-based rates, with no material financial impact[59](index=59&type=chunk)[260](index=260&type=chunk) - The weighted-average interest rate of the company's total debt increased to **4.0%** at March 31, 2023, from **3.5%** at September 30, 2022[69](index=69&type=chunk) [Restructuring](index=21&type=section&id=Restructuring) A March 2023 restructuring plan involves headcount reductions and $41 million in severance costs, primarily in Recorded Music - A restructuring plan was announced in March 2023, targeting a **4% headcount reduction** (approx. **270 people**)[70](index=70&type=chunk) - Total non-recurring restructuring charges of **$41 million** for severance costs were incurred and recorded in the Recorded Music segment for the three and six months ended March 31, 2023[70](index=70&type=chunk)[71](index=71&type=chunk) [Commitments and Contingencies](index=21&type=section&id=Commitments%20and%20Contingencies) The company is involved in routine legal proceedings, not expecting a material adverse effect on its financials - The company is involved in ordinary course legal proceedings but does not expect a material adverse effect on its financial condition, cash flows, or results of operations[72](index=72&type=chunk) [Equity](index=21&type=section&id=Equity) Non-cash stock-based compensation expense includes significant amounts related to CEO separation and new CEO PSUs | Metric (in millions) | 3 Months Ended Mar 31, 2023 | 6 Months Ended Mar 31, 2023 | 6 Months Ended Mar 31, 2022 | | :------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | | Total non-cash stock-based compensation expense | $21 | $35 | $30 | - **$12 million** of non-cash stock-based compensation expense was recognized for the former CEO's separation agreement due to accelerated vesting[79](index=79&type=chunk) - Approximately **$1 million** in non-cash stock-based compensation was recognized for market-based performance share units (PSUs) issued to the newly appointed CEO[80](index=80&type=chunk) [Income Taxes](index=23&type=section&id=Income%20Taxes) Income tax expense decreased due to lower pre-tax income, with the effective tax rate higher than statutory due to various factors | Metric (in millions) | 3 Months Ended Mar 31, 2023 | 3 Months Ended Mar 31, 2022 | 6 Months Ended Mar 31, 2023 | 6 Months Ended Mar 31, 2022 | | :------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Income tax expense | $21 | $34 | $69 | $109 | - The income tax expense is higher than the statutory rate of **21%** due to U.S. state and local taxes, withholding taxes, higher foreign income tax rates, and non-deductible executive compensation, partially offset by a deduction against foreign derived intangible income (FDII)[83](index=83&type=chunk)[84](index=84&type=chunk) [Derivative Financial Instruments](index=23&type=section&id=Derivative%20Financial%20Instruments) The company uses foreign currency forwards and interest rate swaps to manage market risks, with associated realized and unrealized losses - The company uses foreign currency forward exchange contracts and interest rate swaps to manage market risks[86](index=86&type=chunk) - As of March 31, 2023, outstanding foreign currency forward contracts included **$304 million** for sale and **$167 million** for purchase of foreign currencies[88](index=88&type=chunk) - A **$500 million** pay-fixed receive-variable interest rate swap was outstanding as of March 31, 2023, with **$8 million** of unrealized deferred gains[88](index=88&type=chunk) | Derivative Impact (in millions) | 6 Months Ended Mar 31, 2023 | 6 Months Ended Mar 31, 2022 | | :------------------------------------ | :-------------------------- | :-------------------------- | | Realized pre-tax losses (FX contracts) | $(2) | $3 (gains) | | Unrealized pre-tax losses (Interest rate swaps) | $(7) | $28 (gains) | [Segment Information](index=25&type=section&id=Segment%20Information) Performance is evaluated by Recorded Music and Music Publishing segments, with OIBDA trends detailed for both three and six-month periods | Segment Performance (3 Months Ended Mar 31, in millions) | 2023 | 2022 | % Change | | :--------------------------------------- | :--- | :--- | :------- | | Recorded Music Revenues | $1,143 | $1,147 | 0% | | Recorded Music Operating income | $151 | $189 | -20% | | Recorded Music OIBDA | $203 | $250 | -19% | | Music Publishing Revenues | $257 | $230 | 12% | | Music Publishing Operating income | $52 | $38 | 37% | | Music Publishing OIBDA | $75 | $61 | 23% | | Segment Performance (6 Months Ended Mar 31, in millions) | 2023 | 2022 | % Change | | :--------------------------------------- | :--- | :--- | :------- | | Recorded Music Revenues | $2,382 | $2,533 | -6% | | Recorded Music Operating income | $434 | $465 | -7% | | Recorded Music OIBDA | $540 | $580 | -7% | | Music Publishing Revenues | $507 | $459 | 10% | | Music Publishing Operating income | $101 | $70 | 44% | | Music Publishing OIBDA | $147 | $115 | 28% | [Additional Financial Information](index=26&type=section&id=Additional%20Financial%20Information) Details cash interest payments, income taxes paid, a divestiture gain, and declared cash dividends | Metric (in millions) | 3 Months Ended Mar 31, 2023 | 3 Months Ended Mar 31, 2022 | 6 Months Ended Mar 31, 2023 | 6 Months Ended Mar 31, 2022 | | :------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Cash interest payments | $50 | $44 | $75 | $57 | | Income and withholding taxes paid | $72 | $37 | $117 | $66 | - A pre-tax gain of **$41 million** was recorded from the divestiture of certain sound recording rights during the six months ended March 31, 2023[100](index=100&type=chunk) - The company declared and paid a cash dividend of **$0.16 per share** in March 2023, totaling **$83 million** for the quarter and **$167 million** for the six months[103](index=103&type=chunk) [Fair Value Measurements](index=27&type=section&id=Fair%20Value%20Measurements) Fair value of financial instruments, including debt, is primarily determined using Level 2 inputs, with total debt fair value increasing | Financial Instrument (in millions) | March 31, 2023 Fair Value | September 30, 2022 Fair Value | | :--------------------------------- | :------------------------ | :-------------------------- | | Foreign Currency Forward Exchange Contracts (net) | $(4) | $0 | | Interest Rate Swap (net) | $11 | $18 | | Equity Investments with Readily Determinable Fair Value | $9 | $36 | | Total Debt (Fair Value) | $3,628 | $3,181 | - The fair value of the company's debt increased to **$3.628 billion** at March 31, 2023, from **$3.181 billion** at September 30, 2022[111](index=111&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Analyzes financial performance, condition, and liquidity, covering consolidated and segment results, and factors impacting operations [Introduction and Business Overview](index=29&type=section&id=Introduction%20and%20Business%20Overview) Overview of Warner Music Group's operations, key performance measures, and recent events like fiscal year change and restructuring - Warner Music Group Corp. is a major music entertainment company with two core operations: Recorded Music and Music Publishing[119](index=119&type=chunk)[123](index=123&type=chunk) - The company uses OIBDA (Operating Income Before Depreciation and Amortization) and constant currency measures to evaluate operating performance[121](index=121&type=chunk)[122](index=122&type=chunk) - Key revenue sources for Recorded Music include digital, physical, artist services & expanded-rights, and licensing. Music Publishing revenues come from digital, performance, mechanical, synchronization, and other sources[133](index=133&type=chunk)[136](index=136&type=chunk) - The fiscal year-end change for FY2023 means the six months ended March 31, 2022, included an extra week (27 vs. 26 weeks), contributing approximately **$73 million** in revenue, primarily from Recorded Music streaming[137](index=137&type=chunk) - A restructuring plan initiated in March 2023 aims to reduce headcount by approximately **270 people (4% of total)**, incurring **$41 million** in severance costs, with expected annual cost savings of **$49 million** in FY2024[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) - Executive transition costs, including severance and non-cash stock-based compensation, were approximately **$15 million** for the three and six months ended March 31, 2023, related to the former CEO and departing CFO[141](index=141&type=chunk)[142](index=142&type=chunk) - The company suspended operations in Russia on March 10, 2022, due to the Russia-Ukraine conflict, noting that Russian operations do not constitute a material portion of its business[143](index=143&type=chunk) [Results of Operations (Three Months Ended March 31, 2023 Compared with Three Months Ended March 31, 2022)](index=38&type=section&id=Results%20of%20Operations%20%28Three%20Months%20Ended%20March%2031%2C%202023%20Compared%20with%20Three%20Months%20Ended%20March%2031%2C%202022%29) Total revenues increased slightly, but consolidated OIBDA and net income decreased due to restructuring and higher expenses | Metric (in millions) | 3 Months Ended Mar 31, 2023 | 3 Months Ended Mar 31, 2022 | $ Change | % Change | | :----------------------------------- | :-------------------------- | :-------------------------- | :------- | :------- | | Total Revenues | $1,399 | $1,376 | $23 | 2% | | Recorded Music Revenues | $1,143 | $1,147 | $(4) | 0% | | Music Publishing Revenues | $257 | $230 | $27 | 12% | | Total Digital Revenues (after eliminations) | $942 | $931 | $11 | 1% | | Operating Income | $124 | $166 | $(42) | -25% | | OIBDA | $207 | $255 | $(48) | -19% | | Net income attributable to Warner Music Group Corp. | $34 | $92 | $(58) | -63% | - Total revenues increased by **2%** despite **$38 million** of unfavorable currency exchange fluctuations[146](index=146&type=chunk) - Consolidated OIBDA decreased by **19%** due to **$41 million** in restructuring costs, increased non-cash stock-based compensation, and executive transition costs[163](index=163&type=chunk) [Consolidated Results (Three Months)](index=38&type=section&id=Consolidated%20Results%20%28Three%20Months%29) Total revenues increased, but operating income and net income decreased due to higher costs and foreign currency losses | Metric (in millions) | 3 Months Ended Mar 31, 2023 | 3 Months Ended Mar 31, 2022 | $ Change | % Change | | :----------------------------------- | :-------------------------- | :-------------------------- | :------- | :------- | | Total Revenues | $1,399 | $1,376 | $23 | 2% | | Total Digital Revenues | $942 | $931 | $11 | 1% | | Cost of revenues | $721 | $697 | $24 | 3% | | Selling, general and administrative expenses | $452 | $444 | $8 | 2% | | Operating income | $124 | $166 | $(42) | -25% | | Net income attributable to Warner Music Group Corp. | $34 | $92 | $(58) | -63% | - General and administrative expense increased by **$24 million**, primarily due to **$14 million** in higher non-cash stock-based compensation (related to CEO separation) and **$3 million** in Executive Transition Costs[158](index=158&type=chunk) - Selling and marketing expense decreased by **$17 million**, or **9%**, due to lower variable marketing spend[159](index=159&type=chunk) - Other expense increased significantly to **$31 million**, primarily due to **$20 million** in foreign currency losses on Euro-denominated debt and **$13 million** in currency exchange losses on intercompany loans[168](index=168&type=chunk) [Business Segment Results (Three Months)](index=43&type=section&id=Business%20Segment%20Results%20%28Three%20Months%29) Recorded Music revenues were flat with decreased OIBDA, while Music Publishing revenues and OIBDA increased | Segment (3 Months Ended Mar 31, in millions) | 2023 Revenue | 2022 Revenue | % Change Revenue | 2023 OIBDA | 2022 OIBDA | % Change OIBDA | | :----------------------------------------- | :----------- | :----------- | :--------------- | :--------- | :--------- | :--------------- | | Recorded Music | $1,143 | $1,147 | 0% | $203 | $250 | -19% | | Music Publishing | $257 | $230 | 12% | $75 | $61 | 23% | - Recorded Music digital revenue decreased by **$8 million**, with streaming revenue down **$3 million** (impacted by **$20 million** unfavorable FX) due to a lighter release schedule and slowdown in ad-supported revenue. Licensing revenue increased by **$18 million**[149](index=149&type=chunk) - Music Publishing digital revenue increased by **$19 million (15%)**, driven by streaming growth and digital deal renewals. Performance revenue increased by **$9 million (25%)** due to timing of collection society payments and COVID recovery[151](index=151&type=chunk) - Recorded Music OIBDA decreased by **$47 million**, primarily due to **$41 million** in restructuring costs and revenue mix[180](index=180&type=chunk) - Music Publishing OIBDA increased by **$14 million** due to strong operating performance[187](index=187&type=chunk) [Results of Operations (Six Months Ended March 31, 2023 Compared with Six Months Ended March 31, 2022)](index=47&type=section&id=Results%20of%20Operations%20%28Six%20Months%20Ended%20March%2031%2C%202023%20Compared%20with%20Six%20Months%20Ended%20March%2031%2C%202022%29) Total revenues and consolidated OIBDA decreased, impacted by currency fluctuations, prior year's extra week, and restructuring | Metric (in millions) | 6 Months Ended Mar 31, 2023 | 6 Months Ended Mar 31, 2022 | $ Change | % Change | | :----------------------------------- | :-------------------------- | :-------------------------- | :------- | :------- | | Total Revenues | $2,887 | $2,990 | $(103) | -3% | | Recorded Music Revenues | $2,382 | $2,533 | $(151) | -6% | | Music Publishing Revenues | $507 | $459 | $48 | 10% | | Total Digital Revenues (after eliminations) | $1,894 | $1,933 | $(39) | -2% | | Operating Income | $389 | $405 | $(16) | -4% | | OIBDA | $556 | $575 | $(19) | -3% | | Net income attributable to Warner Music Group Corp. | $156 | $279 | $(123) | -44% | - Total revenues decreased by **3%**, including a **$122 million** unfavorable impact from currency exchange fluctuations and the effect of an additional week in the prior year[193](index=193&type=chunk) - Consolidated OIBDA decreased by **3%**, impacted by lower revenues and **$41 million** in restructuring costs, partially offset by a **$41 million** net gain on divestiture[215](index=215&type=chunk) [Consolidated Results (Six Months)](index=47&type=section&id=Consolidated%20Results%20%28Six%20Months%29) Total revenues, operating income, and net income decreased, influenced by foreign currency and a divestiture gain | Metric (in millions) | 6 Months Ended Mar 31, 2023 | 6 Months Ended Mar 31, 2022 | $ Change | % Change | | :----------------------------------- | :-------------------------- | :-------------------------- | :------- | :------- | | Total Revenues | $2,887 | $2,990 | $(103) | -3% | | Total Digital Revenues | $1,894 | $1,933 | $(39) | -2% | | Cost of revenues | $1,482 | $1,515 | $(33) | -2% | | Selling, general and administrative expenses | $892 | $941 | $(49) | -5% | | Operating income | $389 | $405 | $(16) | -4% | | Net income attributable to Warner Music Group Corp. | $156 | $279 | $(123) | -44% | - Selling and marketing expense decreased by **$43 million (11%)** due to lower variable marketing spend[210](index=210&type=chunk) - A net gain of **$41 million** on divestiture was recorded from the sale of certain sound recording rights[213](index=213&type=chunk) - Other expense increased to **$92 million**, primarily due to **$88 million** in foreign currency losses on Euro-denominated debt, contrasting with gains in the prior year[220](index=220&type=chunk) [Business Segment Results (Six Months)](index=55&type=section&id=Business%20Segment%20Results%20%28Six%20Months%29) Recorded Music revenues and OIBDA decreased, while Music Publishing revenues and OIBDA significantly increased | Segment (6 Months Ended Mar 31, in millions) | 2023 Revenue | 2022 Revenue | % Change Revenue | 2023 OIBDA | 2022 OIBDA | % Change OIBDA | | :----------------------------------------- | :----------- | :----------- | :--------------- | :--------- | :--------- | :--------------- | | Recorded Music | $2,382 | $2,533 | -6% | $540 | $580 | -7% | | Music Publishing | $507 | $459 | 10% | $147 | $115 | 28% | - Recorded Music digital revenue decreased by **$75 million**, with streaming revenue down **$59 million (4%)**, impacted by **$55 million** unfavorable FX, a lighter release schedule, and the additional week in the prior year[196](index=196&type=chunk) - Music Publishing digital revenue increased by **$35 million (13%)**, driven by streaming growth and digital deal renewals. Performance revenue increased by **$16 million (22%)** due to collection society payments and COVID recovery[198](index=198&type=chunk) - Recorded Music OIBDA decreased by **$40 million**, impacted by lower revenues and **$41 million** in restructuring costs, partially offset by the net gain on divestiture[233](index=233&type=chunk) - Music Publishing OIBDA increased by **$32 million** due to strong operating performance and favorable foreign currency exchange rates[242](index=242&type=chunk) [Financial Condition and Liquidity](index=60&type=section&id=Financial%20Condition%20and%20Liquidity) Net debt increased, operating cash flow improved, investing cash flow decreased, and financing activities shifted to net cash usage | Metric (in millions) | March 31, 2023 | September 30, 2022 | | :------------------- | :------------- | :----------------- | | Total debt (net) | $3,986 | $3,732 | | Cash and equivalents | $601 | $584 | | Net debt | $3,385 | $3,148 | | Cash Flow (in millions) | 6 Months Ended Mar 31, 2023 | 6 Months Ended Mar 31, 2022 | | :---------------------- | :-------------------------- | :-------------------------- | | Operating activities | $203 | $173 | | Investing activities | $(51) | $(649) | | Financing activities | $(143) | $363 | - The **$30 million** increase in cash provided by operating activities was primarily due to timing of A&R investments and other working capital movements[250](index=250&type=chunk) - Cash used in investing activities decreased by **$598 million**, mainly due to lower investments and acquisitions and proceeds from divestitures[251](index=251&type=chunk) - The company expects its primary liquidity sources to be sufficient for the next twelve months, including funding for a financial transformation initiative with upfront costs of approximately **$235 million** and expected annual run-rate savings of **$35-$40 million**[255](index=255&type=chunk)[256](index=256&type=chunk) - The weighted-average interest rate on outstanding indebtedness decreased from **10.5%** in 2011 to **4.0%** as of March 31, 2023[257](index=257&type=chunk) - The company was in compliance with all debt covenants under its outstanding notes, Revolving Credit Facility, and Senior Term Loan Facility as of March 31, 2023[265](index=265&type=chunk) | Adjusted EBITDA (in millions) | 12 Months Ended Mar 31, 2023 | 12 Months Ended Mar 31, 2022 | 3 Months Ended Mar 31, 2023 | 3 Months Ended Mar 31, 2022 | | :---------------------------- | :--------------------------- | :--------------------------- | :-------------------------- | :-------------------------- | | Adjusted EBITDA | $1,235 | $1,210 | $308 | $282 | | Senior Secured Indebtedness | $3,736 | N/A | N/A | N/A | | Leverage Ratio | 3.03x | N/A | N/A | N/A | [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=67&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Discusses exposure to foreign currency and interest rate risks, and strategies using derivatives, with hypothetical impact analysis - The company is exposed to foreign currency exchange rate risk and interest rate risk[278](index=278&type=chunk) - Foreign currency forward exchange contracts are used to manage foreign currency risk; a hypothetical **10%** U.S. dollar depreciation would decrease their fair value by **$14 million**[279](index=279&type=chunk)[280](index=280&type=chunk) - **80%** of the company's debt was effectively at a fixed rate as of March 31, 2023, through an interest rate swap, to manage interest rate risk on variable-rate debt[281](index=281&type=chunk) - A **25 basis point** increase in interest rates would hypothetically decrease the fair value of fixed-rate debt by approximately **$36 million**[282](index=282&type=chunk) - Inflation has not had a material effect on the business to date, but significant inflationary pressures could adversely affect results if not offset by price increases[283](index=283&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=68&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective, with no material changes in internal control over financial reporting - The company's disclosure controls and procedures were deemed effective as of March 31, 2023, ensuring timely and accurate reporting[288](index=288&type=chunk) - No material changes in internal control over financial reporting occurred during the three months ended March 31, 2023[289](index=289&type=chunk) PART II. OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=69&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal proceedings, not expecting a material adverse effect on its financial condition or operations - The company is involved in routine legal proceedings and does not expect a material adverse effect on its financial condition or operations[291](index=291&type=chunk) [ITEM 1A. RISK FACTORS](index=69&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for FY2022 - No material changes to risk factors since the Annual Report on Form 10-K for FY2022[292](index=292&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=69&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Not applicable - Not applicable[293](index=293&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=69&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Not applicable - Not applicable[294](index=294&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=69&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - Not applicable[295](index=295&type=chunk) [ITEM 5. OTHER INFORMATION](index=69&type=section&id=Item%205.%20Other%20Information) Details the CFO succession plan, including severance, bonus eligibility, and RSU award for Eric Levin - The company is planning for the succession of its Chief Financial Officer, Eric Levin, whose employment will continue until January 15, 2024[296](index=296&type=chunk)[297](index=297&type=chunk) - Under the separation agreement, Mr. Levin will receive **$1,000,000** in cash severance, a **$57,602.57** net cash payment, eligibility for FY2023 and prorated FY2024 annual bonuses (target **$1,000,000** each), and a **$1,000,000** RSU award[298](index=298&type=chunk) [ITEM 6. EXHIBITS](index=70&type=section&id=Item%206.%20Exhibits) Lists key exhibits filed, including credit agreement amendments and executive separation agreements - Key exhibits include the Fourth Amendment to Credit Agreement, Employment Separation Agreement and Release for Stephen Cooper, and Mutual Separation Agreement and Release with Eric Levin[301](index=301&type=chunk) [Signatures](index=71&type=section&id=Signatures) The report was signed by the Chief Executive Officer and Chief Financial Officer on May 9, 2023 - The report was signed by Robert Kyncl (CEO) and Eric Levin (CFO) on May 9, 2023[306](index=306&type=chunk)

Warner Music Group Corp. (NASDAQ:WMG) Q1 2023 Earnings Conference Call February 9, 2023 8:30 AM ET Company Participants Kareem Chin - Head of IR Robert Kyncl - CEO Eric Levin - CFO Conference Call Participants Benjamin Black - Deutsche Bank Sebastiano Petti - JPMorgan Benjamin Swinburne - Morgan Stanley Rich Greenfield - LightShed Partners Matthew Thornton - Truist Securities Michael Morris - Guggenheim Partners Kutgun Maral - RBC Capital Markets Stephen Laszczyk - Goldman Sachs Operator Welcome to Warner M ...

Financial Performance - Total revenues decreased by $126 million, or 8%, to $1,488 million for the three months ended December 31, 2022, compared to $1,614 million for the same period in 2021 [121]. - Recorded Music revenues decreased by $147 million, or 11%, to $1,239 million for the three months ended December 31, 2022, from $1,386 million for the same period in 2021 [123]. - Digital revenues decreased by $67 million, including an unfavorable impact of foreign currency exchange rates of $37 million, for the three months ended December 31, 2022 [124]. - Streaming revenue decreased by $56 million, or 7%, to $780 million for the three months ended December 31, 2022, impacted by unfavorable foreign currency exchange rates of $35 million [124]. - Music Publishing revenues increased by $21 million, or 9%, to $250 million for the three months ended December 31, 2022, compared to $229 million for the same period in 2021 [125]. - U.S. Recorded Music revenues were $539 million for the three months ended December 31, 2022, down from $608 million in the same period in 2021 [123]. - International Recorded Music revenues were $700 million for the three months ended December 31, 2022, compared to $778 million for the same period in 2021 [123]. - Total digital revenues after intersegment eliminations decreased by $50 million, or 5%, to $952 million for the three months ended December 31, 2022 [122]. - Artist services and expanded-rights revenue decreased by $26 million due to lower direct-to-consumer merchandising revenue and advertising revenue [124]. - Licensing revenue increased by $8 million, driven by higher broadcast fees and synchronization revenue [124]. - U.S. revenue decreased by $51 million, or 7%, to $672 million, with U.S. Recorded Music revenue down by $69 million, or 11% [127]. - International revenue decreased by $75 million, or 8%, to $817 million, but increased by $9 million, or 1%, excluding the unfavorable impact of foreign currency exchange rates [128]. - Total cost of revenues decreased by $57 million, or 7%, to $761 million, with artist and repertoire costs down by $29 million, or 6% [129]. - Total selling, general and administrative expenses decreased by $57 million, or 11%, to $440 million, representing 30% of revenue [132]. - OIBDA increased by $29 million to $349 million, with an OIBDA margin increase to 23% from 20% [138]. - Operating income increased by $26 million to $265 million, attributed to lower revenues offset by reduced costs [141]. - Net income decreased by $64 million to $124 million, primarily due to lower pre-tax income [145]. - The company recorded a pre-tax gain of $41 million from the sale of certain sound recording rights [136]. - Amortization expense increased by $3 million, or 5%, to $63 million, mainly due to the acquisition of music-related assets [140]. - Recorded Music operating income increased by $7 million, or 3%, to $283 million for the three months ended December 31, 2022, compared to $276 million for the same period in 2021 [156]. - Music Publishing operating income increased by $17 million, or 53%, to $49 million for the three months ended December 31, 2022, compared to $32 million for the same period in 2021 [164]. - Recorded Music OIBDA increased by $7 million, or 2%, to $337 million for the three months ended December 31, 2022, compared to $330 million for the same period in 2021 [155]. - Music Publishing OIBDA increased by $18 million, or 33%, to $72 million for the three months ended December 31, 2022, compared to $54 million for the same period in 2021 [162]. Debt and Liquidity - At December 31, 2022, the company had $3.946 billion of debt and $720 million of cash and equivalents, resulting in net debt of $3.226 billion [168]. - Total long-term debt as of December 31, 2022, was $3,990 million, with a weighted-average interest rate reduced to 3.7% from 10.5% in 2011 [179][177]. - The company declared a cash dividend of $0.16 per share, totaling approximately $84 million paid to stockholders for the three months ended December 31, 2022 [183]. - The financial transformation initiative is expected to incur upfront costs of approximately $185 million, with anticipated annualized run-rate savings between $35 million and $40 million [176]. - The company’s S&P corporate credit rating improved from B in 2017 to BB+ in July 2021, indicating enhanced creditworthiness [177]. - As of December 31, 2022, the company had $300 million of commitments under the Revolving Credit Facility, with no loans outstanding [179]. - The company expects its primary sources of liquidity to be sufficient to support existing operations over the next twelve months [175]. - The company was in compliance with its covenants under its outstanding notes and credit facilities as of December 31, 2022 [184]. - The company believes that funds generated from operations and available cash will be sufficient to meet debt service and capital expenditure requirements for the foreseeable future [192]. - The company continues to evaluate opportunities for debt repayment, dividends, and equity repurchases based on market conditions and financial liquidity [192]. Market and Operational Strategy - Warner Music Group reported a significant increase in digital revenue, which is expected to continue driving growth in the music entertainment industry [110]. - The company has a catalog of over 1 million musical compositions, representing works by more than 100,000 songwriters and composers [104]. - Warner Music Group's Recorded Music business operates in over 70 countries, highlighting its extensive international reach [107]. - The company launched 300 Elektra Entertainment, combining the strengths of 300 Entertainment and Elektra Music Group, to enhance its market presence [106]. - The integration of digital content marketing into all business aspects is aimed at maximizing revenue streams from emerging technologies [110]. - Future growth is anticipated through the development of new distribution channels and formats in the digital music space [94]. - The company faces risks related to competition, digital piracy, and fluctuations in currency exchange rates that could impact its performance [96]. - The company is focused on reducing overhead expenditures and managing its cost structure to improve profitability [95]. Currency and Interest Rate Exposure - The company is exposed to foreign currency risk, with outstanding hedge contracts for the sale of $337 million and the purchase of $197 million of foreign currencies at fixed rates [195]. - A hypothetical 10% depreciation of the U.S. dollar against foreign currencies would decrease the fair value of foreign exchange forward contracts by $14 million [196]. - Interest rate swaps have been utilized to convert a portion of the $1.295 billion variable-rate debt to fixed rates, resulting in 88% of the company's debt effectively being at a fixed rate [197]. - Inflationary pressures have not materially affected the company's operations to date, but significant increases in costs could harm financial performance [199].

Financial Data and Key Metrics Changes - Total revenue in Q4 was $1.5 billion, representing year-over-year growth of 16% [6][17] - Adjusted EBITDA increased 16% to $276 million, with a margin of 18.4% compared to 17.2% in the prior year quarter [6][17] - For the full year, total revenue growth was 16% and adjusted OIBDA growth was 18% [8][19] - Operating cash flow increased 78% to $406 million in Q4, and free cash flow increased 91% to $368 million [22] Business Line Data and Key Metrics Changes - Recorded music revenue was $1.24 billion, an increase of 13% [6][18] - Streaming revenue grew 10.4% when adjusted for the one-time impact of the DSP renewal [7][18] - Artist services revenue increased by 33%, while licensing and physical revenue were up by 38% and 6%, respectively [7][18] - Music publishing revenue grew 32% to $254 million, with digital revenue increasing by 39% [7][18] Market Data and Key Metrics Changes - Developed markets continue to grow in the double digits, while emerging markets are growing at higher percentages [8][23] - Global smartphone penetration is expected to increase significantly in the coming years, supporting streaming growth [8][23] - Consumption in Eastern Europe grew 20% in 2021, indicating a new growth area for music [12] Company Strategy and Development Direction - The company focuses on four key pillars: music, globalization, innovation, and people [9] - Emphasis on identifying and developing original artists globally, moving from an Anglo-centric model to a truly global music entertainment company [12] - The company is investing in emerging markets and diversifying its revenue streams through partnerships with over 200 streaming services [12][13] Management's Comments on Operating Environment and Future Outlook - Management acknowledges challenges from financial volatility, rising interest rates, and declines in online advertising spend [6][17] - There is optimism about the future, with expectations of continued growth in streaming revenue and potential price increases from digital partners [8][23] - The company is well-positioned to capitalize on the recovery of the online ad market and the growth of emerging streaming platforms [23] Other Important Information - The company has a cash balance of $584 million and total debt of $3.7 billion as of September 30 [22] - A leadership transition is underway, with Robert Kyncl set to become CEO in January 2023 [15] Q&A Session All Questions and Answers Question: What has been the biggest change for the industry and the company over the last five to ten years? - The biggest change has been the shift from an Anglo-American music company to a global music entertainment platform, focusing on offering fans access to unlimited music [26][27] Question: Can you help frame the emerging streaming opportunity in fiscal '23? - The company expects to start a series of deal renewals in fiscal '23, with a focus on negotiating for the full value of music [28][29] Question: How will the shift to a normalized reporting schedule affect modeling for '23? - The main impact will be in fiscal Q1 of '23 due to the previous 53-week reporting cycle, but subsequent quarters will have consistent year-over-year comparisons [32][33] Question: Are there any parts of the story that remain misunderstood by investors? - The business is often misunderstood when evaluated on a quarterly basis rather than on a longer-term trajectory, which shows consistent growth [36][37] Question: What are the expectations for recorded music streaming revenue in 2023? - The company anticipates continued strong growth in subscription streaming, with emerging markets showing even faster growth than developed markets [40][41] Question: What is the approach to negotiating with ByteDance and improving monetization? - The company aims to negotiate each deal to ensure full value for music, focusing on expanding products and services positively for consumption [44][46]

Welcome to the Warner Music Group quarterly earnings call for the period ended June 30, 2022. At the request of Warner Music Group, today's call is being recorded for replay purposes. And if you object, you may disconnect at any time. Now I would like to turn today's call over to your host, Mr. Kareem Chin, head of investor relations. You may begin. Good morning, everyone. Welcome to Warner Music Group's fiscal third quarter earnings conference call. Please note that our earnings press release, earnings sna ...

Financial Performance - Warner Music Group reported a significant increase in revenue, with a year-over-year growth of 20% for the quarter ended June 30, 2022, reaching $1.5 billion[165]. - Total revenues increased by $92 million, or 7%, to $1,432 million for the three months ended June 30, 2022, compared to $1,340 million for the same period in 2021[186]. - Total revenues increased by $497 million, or 13%, to $4,422 million for the nine months ended June 30, 2022, compared to $3,925 million for the same period in 2021[233]. - The company's net income for the twelve months ended June 30, 2022, was $435 million, up from $278 million in the previous year, representing a growth of approximately 56.5%[309]. - Net income increased by $64 million to $125 million for the three months ended June 30, 2022, compared to $61 million in the same period in 2021[212]. Revenue Breakdown - Digital revenue accounted for 75% of total revenue, highlighting the growing importance of digital distribution channels[173]. - Recorded Music revenues increased by $37 million, or 3%, to $1,189 million for the three months ended June 30, 2022, from $1,152 million for the same period in 2021[189]. - Artist services and expanded-rights revenue increased by $57 million, or 43%, primarily due to higher touring activity[190]. - Music Publishing revenues increased by $56 million, or 30%, to $245 million for the three months ended June 30, 2022, from $189 million for the same period in 2021[191]. - Streaming revenue decreased by $8 million, or 1%, to $773 million for the three months ended June 30, 2022, impacted by unfavorable foreign currency exchange rates of $28 million[190]. Cost and Expenses - Total cost of revenues increased by $85 million, or 12%, to $766 million, with artist and repertoire costs rising by $42 million, or 9%[195]. - Selling, general and administrative expenses increased by $14 million, or 3%, to $451 million, while expressed as a percentage of revenue, it decreased to 31% from 33%[198]. - Total cost of revenues for Recorded Music increased by $46 million, or 8%, to $606 million for the three months ended June 30, 2022, from $560 million for the same period in 2021[217]. - Selling, general and administrative expenses for Recorded Music increased by $15 million, or 4%, to $371 million for the three months ended June 30, 2022, from $356 million for the same period in 2021[219]. OIBDA and Margins - The company's OIBDA for the same quarter was $300 million, reflecting a 15% increase compared to the previous year[165]. - OIBDA decreased by $8 million to $233 million, with an OIBDA margin decrease to 16% from 18% due to higher costs and lower margin revenue streams[204]. - OIBDA increased by $72 million, or 10%, to $808 million for the nine months ended June 30, 2022, with an OIBDA margin decreasing to 18% from 19%[251]. - Recorded Music OIBDA decreased by $26 million to $224 million for the three months ended June 30, 2022, from $250 million for the same period in 2021[220]. International Operations - The company has expanded its Recorded Music operations internationally, conducting business in over 70 countries[170]. - International Recorded Music revenues increased by $26 million, or 4%, to $674 million for the three months ended June 30, 2022, from $648 million for the same period in 2021[189]. - International revenue increased by $35 million, or 5%, to $782 million, with a 14% increase when excluding the unfavorable impact of foreign currency exchange rates[194]. Digital Strategy and Growth - Future growth is anticipated from the continued expansion of digital services and the integration of marketing strategies across all distribution channels[173]. - The company aims to enhance its competitive position by developing new distribution channels and monetizing music through innovative formats[157]. - Digital revenues increased by $264 million, or 10%, to $2,877 million for the nine months ended June 30, 2022, driven by a growth in streaming services[234]. Debt and Financial Position - As of June 30, 2022, total debt was $3.785 billion, with net debt of $3.440 billion after accounting for $345 million in cash and equivalents[282]. - The company declared a cash dividend of $0.15 per share on May 13, 2022, resulting in total cash dividends of approximately $79 million for the three months ended June 30, 2022[302]. - The company’s ability to pay dividends may be restricted if the Total Indebtedness to EBITDA Ratio exceeds 3.50:1.00[300]. - The company believes that funds generated from operations and available cash will be sufficient to meet debt service, working capital, and capital expenditure requirements for the foreseeable future[317]. Market Risks and Economic Factors - The company is exposed to market risks from changes in foreign currency exchange rates and interest rates, which could impact future cash flows[319]. - Inflationary factors have not had a material effect on the company's business or financial condition to date, but significant inflation could adversely affect operations[324]. - A hypothetical 10% depreciation of the U.S. dollar against foreign currencies would decrease the fair value of foreign exchange forward contracts by $4 million[321].

Warner Music Group Corp. (NASDAQ:WMG) Q2 2022 Earnings Conference Call May 10, 2022 8:30 AM ET Company Participants Kareem Chin - IR Steve Cooper - CEO Eric Levin - CFO Conference Call Participants Benjamin Black - Deutsche Bank Ben Swinburne - Morgan Stanley Kutgun Maral - RBC Capital Markets Andrew Uerkwitz - Jefferies Michael Morris - Guggenheim Matthew Thornton - Truist Jason Bazinet - Citi Operator Welcome to Warner Music Group's Second Quarter Earnings Call for the period ended March 31, 2022. At the ...

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 March 31, 2022 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) 13-4 ...

differ materially from those in the forward-looking statements is contained in our filings with the SEC. And with that, I'll turn it over to Steve. Thanks, Kareem. Good morning, everyone, and thanks for joining us. When we spoke last in mid-November, I indicated to you that we would have a productive end to 2021. The last few months have met those expectations. And as a result, we're off to a great start in fiscal 22. In Q1, our total revenue was $1.6 billion, an all-time high during our 18 years as a stand ...

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, 2021 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 ...