Warner Music (WMG) Q2 2025 Earnings Call May 08, 2025 08:30 AM ET Company Participants Kareem Chin - Senior VP & Head of Investor RelationsRobert Kyncl - CEOBryan Castellani - Executive VP & CFOMichael Morris - Senior Managing DirectorBenjamin Black - Co-Head Internet Equity ResearchKutgun Maral - DirectorStephen Laszczyk - Vice President Conference Call Participants Batya Levi - Managing Director - Communications, Media & Infrastructure AnalystNone - Analyst Operator Welcome to Warner Music Group's Second ...

Financial Data and Key Metrics Changes - The company's revenue increased by 1% in Q2 2025, with recorded music revenue growing by 1% and music publishing revenue growing by 3% [7][24] - Adjusted OIBDA decreased by 1%, with an adjusted OIBDA margin of 20.4%, a decrease of 50 basis points compared to the prior year [24] - Operating cash flow increased to $69 million from a use of $31 million in the prior year quarter, with free cash flow increasing to $33 million from a use of $57 million [28][29] Business Line Data and Key Metrics Changes - Subscription streaming revenue grew by 3%, while ad-supported streaming declined by 3% due to a soft ad environment [24][25] - Physical revenue increased by 2%, driven by strong releases in the U.S. and Japan, partially offset by the BMG roll-off [25] - Music publishing total revenue increased by 3%, with streaming revenue increasing by 2% [26] Market Data and Key Metrics Changes - Market share pressure was noted in China, contributing to a challenging year-over-year comparison in subscription streaming [7][24] - The company saw real progress in high-growth markets such as MENA, Nigeria, and India, where market share has meaningfully increased [12] Company Strategy and Development Direction - The company is focused on three strategic priorities: growing market share, growing the value of music, and increasing efficiency to free up capital for reinvestment [8][19] - The company is increasing M&A activity and expects to have more news about investment plans in the near future [15][21] - The launch of the WMG Pulse app aims to provide real-time insights for artists, enhancing their engagement and operational efficiency [21][37] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the resilience of music as an art form and the alignment of the industry towards growth through subscribers and price increases [8] - The company anticipates that challenges experienced in Q2 will persist for the remainder of the fiscal year, resulting in lower subscription streaming growth than previously expected [22] Other Important Information - The company announced plans to achieve over $300 million in annualized cost savings, with the majority being reinvested in music and technology [19] - The company has a cash balance of $637 million and total debt of $4.3 billion, with a weighted average cost of debt at 4.1% [29] Q&A Session Summary Question: What confidence can you give investors regarding Warner Music's growth goals? - Management emphasized the execution of their strategy focused on market share growth, value of music, and efficiency, which is showing early signs of success [34][36] Question: Can you elaborate on your strategy to grow global market share, particularly in emerging markets? - Management highlighted successes in Mexico and Brazil and mentioned a new head of Asia to drive growth in the largest markets in Asia, including China [45][46] Question: What changed regarding your expectations for subscription growth? - Management noted that tough comparisons from the previous year, market pressure, a lighter release schedule, and weakness in China contributed to the current results [52][54] Question: Can you provide more details on the investments in ANR and market share goals? - Management stated that investments in ANR are focused on maximizing value through local repertoire and that they are shifting towards a repertoire lens for capital allocation [66][68]

FISCAL Q2 2025 Earnings Snapshot © Warner Music Group 2025 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 2025 Confidential This presentation is a supplement to, and should be read in conjunction with, Warner Music Group's e ...

Financial Highlights Q2 Performance Driven by Revenue Growth Across Recorded Music and Music PublishingCost Savings Plans on Track, With Reinvestment Initiatives AcceleratingYear-to-Date Operating Cash Flow and Free Cash Flow Increased by 53% and 59%, Respectively For the three months ended March 31, 2025 Total revenue decreased 1%, or increased 1% in constant currencyNet income decreased 63% to $36 million versus $96 million in the prior-year quarterOperating income increased 41% to $168 million versus $11 ...

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, 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) 13-4 ...

Revenue Performance - Total revenue for Q2 2025 decreased by 1% to $1,484 million, but increased by 1% in constant currency[4] - Total revenue for the three months ended March 31, 2025, was $1,484 million, a decrease of 1% from $1,494 million in the prior year[25] - Total digital revenue for the three months ended March 31, 2025, was $1,027 million, a decrease of 1% from $1,035 million in the same period in 2024[28] - U.S. recorded music revenue decreased by 2% to $497 million from $508 million year-over-year[35] - International recorded music revenue increased by 3% to $678 million compared to $681 million in the previous year[35] Income and Profitability - Net income fell 63% to $36 million compared to $96 million in the prior-year quarter[4] - Adjusted OIBDA decreased by 3% to $303 million, with a margin of 20.4%[4][8] - Adjusted OIBDA for the three months ended March 31, 2025, was $303 million, down 3% from $312 million in the same period in 2024[30] - The total net income for the six months ended March 31, 2025, was $277 million, a decrease of 4% from $289 million in the same period in 2024[30] Operating Income - Operating income increased by 41% to $168 million from $119 million in the prior-year quarter[4] - Operating income for Recorded Music increased by 51% to $203 million, with an operating margin of 17.3%[15] - Operating income decreased by 24.6% to $52 million from $69 million in the prior-year quarter, with an operating margin decline of 5.7 percentage points to 16.8%[19] - The operating income margin for the three months ended March 31, 2025, improved to 11.3%, compared to 8.0% in the same period in 2024[30] Cash Flow and Liquidity - Year-to-date operating cash flow and free cash flow increased by 53% and 59%, respectively[4] - Cash provided by operating activities increased to $69 million from a use of $31 million in the prior-year quarter[12] - For the six months ended March 31, 2025, net cash provided by operating activities was $401 million, compared to $262 million in the same period of 2024[39] - Free Cash Flow for the three months ended March 31, 2025, was $33 million, a significant improvement from a negative $57 million in the same period of 2024[39] Debt and Assets - Total debt stood at $4.292 billion, with net debt of $3.655 billion as of March 31, 2025[11] - Total assets increased by 5% to $9,568 million as of March 31, 2025, from $9,155 million on September 30, 2024[27] - Total liabilities rose by 4% to $8,778 million as of March 31, 2025, compared to $8,480 million on September 30, 2024[27] Digital and Streaming Revenue - Digital revenue decreased by 0.8%, while streaming revenue decreased by 0.3%[6][14] - Digital revenue rose by 0.5% to $188 million, while streaming revenue remained flat year-over-year[18] - Total digital revenue for recorded music was $1,714 million, a 1% decrease from $1,756 million year-over-year[36] Music Publishing - Music Publishing revenue increased by 1.3% to $310 million for the three months ended March 31, 2025, compared to $306 million in the prior year[18] - Music publishing revenue increased by 3% to $310 million compared to $306 million in the previous year[36] - Music Publishing Adjusted OIBDA for the three months ended March 31, 2025, was $85 million, an increase of 4% from $82 million in the same period in 2024[31] Capital Expenditures - Capital expenditures for the three months ended March 31, 2025, were $36 million, compared to $26 million in the same period of 2024[39]

Core Viewpoint - Warner Music Group Corp. (WMG) is anticipated to report a year-over-year increase in earnings driven by higher revenues for the quarter ended March 2025, with a consensus outlook suggesting a significant impact on its near-term stock price based on actual results compared to estimates [1][2]. Earnings Expectations - The upcoming earnings report is expected to show quarterly earnings of $0.28 per share, reflecting a year-over-year increase of +55.6%, with revenues projected at $1.51 billion, up 0.9% from the previous year [3]. Estimate Revisions - The consensus EPS estimate has been revised 2.2% lower over the last 30 days, indicating a reassessment by analysts of their initial estimates [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that the Most Accurate Estimate is higher than the Zacks Consensus Estimate, resulting in a positive Earnings ESP of +9.09%, although the stock carries a Zacks Rank of 4, complicating predictions of an earnings beat [10][11]. Historical Performance - Warner Music Group has a history of beating consensus EPS estimates, having exceeded expectations three out of the last four quarters, including a +32.35% surprise in the last reported quarter [12][13]. Conclusion - While the company does not appear to be a compelling earnings-beat candidate, it is essential for investors to consider other factors influencing stock performance ahead of the earnings release [16].

Core Insights - Warner Music Group (WMG) is launching a new joint venture label named 5 Junction, aimed at discovering and nurturing U.S.-based artists of South Asian heritage and amplifying the success of existing South Asian artists within WMG [1][2] - The initiative is led by Anjula Acharia, who emphasizes the importance of representation and the global power of South Asian stories in music [2][3] - WMG's India team has expanded its presence in South Asia, attracting notable regional talent with global potential, such as Diljit Dosanjh and King [2][3] Group 1 - 5 Junction will collaborate closely with Warner Records in Los Angeles, focusing on the intersection of culture and commerce to enhance the visibility of South Asian music in the U.S. [1][2] - Robert Kyncl, CEO of WMG, highlights the early recognition of the global potential in South Asian music and the strategic positioning to capitalize on this market [2][3] - The label aims to amplify South Asian music, which has a significant diaspora and cultural rhythm, to thrive in the U.S. music market [2][3] Group 2 - Anjula Acharia is recognized for her role in launching Priyanka Chopra Jonas' career and connecting global talent with opportunities [3] - Acharia's previous work includes introducing Western superstars to South Asian audiences, showcasing her expertise in cross-cultural collaborations [3] - The partnership with 91 North Records, a joint venture between Warner Music India and Warner Music Canada, will further enhance the fusion of South Asian music in Canada [2]

Accomplished Leader from Activision Blizzard and Procter & Gamble NEW YORK, April 14, 2025 /PRNewswire/ -- Warner Music Group Corp. (Nasdaq: WMG) today announced that Armin Zerza is joining the company as Executive Vice President and Chief Financial Officer, effective May 5, reporting to CEO Robert Kyncl. Zerza brings extensive global financial, commercial, and operational leadership experience, most recently serving as CFO of Activision Blizzard, while it was traded on the NASDAQ stock exchange. At the sam ...

Financial Results Announcement - Warner Music Group Corp. will release its financial results for the second quarter ended March 31, 2025, on May 8, 2025 [1] - An earnings conference call is scheduled for the same day at 8:30 a.m. ET [1] Conference Call Access - Registration is required to access the conference call, and participants will receive unique dial-in details via email [2] - It is recommended to join the call 10 minutes early or to use the webcast option if no questions are anticipated [2] - A replay of the conference call will be available on the company's website [2] Company Overview - Warner Music Group operates in over 70 countries and includes a variety of renowned labels and a music publishing arm with a catalog of over one million copyrights [3] - The company supports the independent community through ADA and has an artist services division called WMX [3]