FISCAL Q4 2025 Earnings Snapshot © Warner Music Group 2025 Confidential 1 This presentation is a supplement to, and should be read in conjunction with, Warner Music Group's earnings release for the quarter ended September 30, 2025. 2 Q4 2025 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 w ...

Core Insights - Warner Music Group has resolved its copyright dispute with Udio and signed a deal to collaborate on an AI music creation service that will enable users to remix songs by established artists [1][3] - The agreement highlights the transformative impact of AI on the music industry, with a surge in AI-generated music and virtual artists gaining popularity on streaming platforms [2] - The partnership aims to create new revenue streams for artists and songwriters while ensuring their intellectual property is protected [4] Company Developments - Warner Music Group represents high-profile artists such as Ed Sheeran and Dua Lipa and has established a framework for Udio's licensed AI music service, set to launch in 2026 [3] - Udio will operate as a "closed-system" and will credit and compensate artists and songwriters whose works are used in remixes or new creations [5] - Warner Music has also announced a collaboration with Stability AI to develop professional-grade tools for musicians, songwriters, and producers [6] Industry Trends - The rise of AI music generators is reshaping the music landscape, allowing users without musical knowledge to create new tunes based on simple prompts [2] - Major record labels, including Universal Music Group, have begun to engage with AI technologies, although Sony Music Entertainment has yet to sign a licensing deal with Udio or Suno [6]

格隆汇11月20日｜华纳音乐(WMG.US)盘前涨2.9%，此前第四季度营收超出预期。 ...

Restructuring Plans - The Company expects the 2025 Restructuring Plan to generate pre-tax cost savings of approximately $300 million annually by the end of fiscal year 2027[303]. - Total severance and other termination costs recorded in connection with the 2025 Restructuring Plan were $90 million for the fiscal year ended September 30, 2025[304]. - The 2024 Strategic Restructuring Plan is substantially complete, with remaining cash payments expected to be made by the end of fiscal year 2026[305]. - The Company anticipates incurring total charges of approximately $200 million on a pre-tax basis related to the 2025 Restructuring Plan[303]. - The company recognized total cumulative restructuring and impairment charges of $216 million related to the 2024 Strategic Restructuring Plan[310]. - The company reported a restructuring and severance expense of $107 million for the twelve months ended September 30, 2025[446]. Financial Performance - Total revenues increased by $281 million, or 4%, to $6,707 million for the fiscal year ended September 30, 2025, compared to $6,426 million for the fiscal year ended September 30, 2024[314]. - Adjusted OIBDA increased by $11 million to $1,443 million for the fiscal year ended September 30, 2025, from $1,432 million for the fiscal year ended September 30, 2024[334]. - Net income attributable to Warner Music Group Corp. decreased by $70 million, or 16%, to $365 million for the fiscal year ended September 30, 2025, from $435 million for the fiscal year ended September 30, 2024[333]. - For the twelve months ended September 30, 2025, net income was $370 million, compared to $478 million for the same period in 2024[446]. - Adjusted EBITDA for the twelve months ended September 30, 2025, was $1,752 million, an increase from $1,619 million in 2024[446]. Revenue Sources - Recorded Music revenues are derived from four main sources, including digital, physical, artist services, and licensing[302]. - Digital revenues increased by $113 million, or 3%, to $4,393 million for the fiscal year ended September 30, 2025, representing 65% of consolidated revenues[315]. - Recorded Music revenues increased by $185 million, or 4%, to $5,408 million for the fiscal year ended September 30, 2025, with international revenues accounting for 60% of total Recorded Music revenues[316]. - Artist services and expanded-rights revenue increased by $151 million, or 22%, primarily due to higher merchandising revenue and concert promotion[317]. - Music Publishing revenues increased by $96 million, or 8%, to $1,306 million for the fiscal year ended September 30, 2025, driven by growth in digital and performance revenues[318]. Costs and Expenses - Total cost of revenues increased by $277 million, or 8%, to $3,632 million for the fiscal year ended September 30, 2025, from $3,355 million for the fiscal year ended September 30, 2024[322]. - Artist and repertoire costs increased by $175 million, or 8%, to $2,342 million for the fiscal year ended September 30, 2025, from $2,167 million for the fiscal year ended September 30, 2024[323]. - Selling and marketing expense decreased by $43 million, or 6%, to $642 million for the fiscal year ended September 30, 2025, from $685 million for the fiscal year ended September 30, 2024[328]. - General and administrative expense increased by $46 million to $1,135 million for the fiscal year ended September 30, 2025, from $1,089 million for the fiscal year ended September 30, 2024[327]. - Restructuring and impairment costs totaled $234 million for the fiscal year ended September 30, 2025, consisting of approximately $95 million of restructuring charges and approximately $139 million of non-cash impairment losses[330]. Debt and Liquidity - At September 30, 2025, total debt was $4.365 billion, compared to $4.014 billion at September 30, 2024[370]. - Cash and equivalents decreased to $532 million at September 30, 2025, from $694 million at September 30, 2024[370]. - The company believes its primary sources of liquidity will be sufficient to support existing operations over the next twelve months[382]. - As of September 30, 2025, total firm commitments and outstanding debt amounted to $6.580 billion, with $845 million due within one year[455]. - The company has additional borrowing capacity under its indentures and the Senior Term Loan Facility[452]. Market and Economic Factors - Inflationary factors such as increases in overhead costs may adversely affect the company's results of operations[476]. - The company does not believe that inflation has had a material effect on its business, financial condition, or results of operations to date[476]. - If costs become subject to significant inflationary pressures, the company may not be able to fully offset such higher costs through price increases for services[476]. - The inability to offset higher costs could harm the company's business, financial condition, or results of operations[476].

Revenue Performance - Quarterly revenue reached an all-time high of $1,868 million, a 15% increase compared to $1,630 million in the prior year[5] - Total revenue for the full year increased by 4% to $6,707 million, with a 4.4% increase in constant currency[5] - Revenue for the three months ended September 30, 2025, increased by 15% to $1,868 million compared to $1,630 million for the same period in 2024[43] - For the three months ended September 30, 2025, total digital revenue increased by 8% to $1,152 million compared to $1,066 million for the same period in 2024[47] - For the twelve months ended September 30, 2025, total revenue was $6,707 million, a 4% increase from $6,426 million in 2024[56] Digital Revenue - Digital revenue increased by 8% to $951 million, while recorded music streaming revenue grew by 7.5%[7] - Digital revenue rose by 7.9% to $951 million, with streaming revenue up 7.5% to $1,200 million, reflecting growth in subscription revenue of 8.5%[22] - Recorded music digital revenue for the twelve months ended September 30, 2025, was $3,594 million, a 2% increase from $3,519 million in 2024[47] - Total digital revenue for the twelve months ended September 30, 2025, was $4,393 million, a 3% increase from $4,280 million in 2024[47] Income and Profitability - Net income for the quarter was $109 million, up from $48 million in the prior-year quarter, marking a significant increase of 127%[10] - Operating income for the full year decreased by 16% to $694 million compared to $823 million in the prior year[16] - Net income attributable to Warner Music Group Corp. for the three months ended September 30, 2025, was $109 million, compared to $41 million for the same period in 2024, reflecting a significant increase[44] - Net income attributable to Warner Music Group Corp. for the twelve months ended September 30, 2025, was $365 million, a decrease of 16% from $435 million in 2024[50] Cash Flow and Operating Activities - Cash provided by operating activities decreased by 24% to $231 million from $304 million in the prior-year quarter[13] - The company reported a net cash provided by operating activities of $231 million for the three months ended September 30, 2025, compared to $304 million in 2024[46] - Free cash flow for the year decreased by 16% to $539 million from $638 million in the prior year[19] - Free Cash Flow for the three months ended September 30, 2025, was $203 million, down from $271 million in the same period of 2024[60] Adjusted OIBDA - Adjusted OIBDA rose 15% to $405 million, with a margin of 21.7%[9] - Adjusted OIBDA for Recorded Music increased by 12.0% to $355 million, with a margin of 23.1%, down from 23.7% in the prior year[25] - Adjusted OIBDA for Music Publishing rose by 16.9% to $97 million, with a margin of 28.8%[33] - Adjusted OIBDA for the three months ended September 30, 2025, rose by 15% to $405 million from $353 million in 2024[50] - Adjusted OIBDA margin for Total WMG was 21.5% for the twelve months ended September 30, 2025, down from 22.3% in 2024[57] Debt and Assets - Total debt as of September 30, 2025, was $4.365 billion, with net debt of $3.833 billion[12] - Total assets increased by 7% to $9,829 million as of September 30, 2025, compared to $9,155 million in 2024[45] Artist Services and Expanded-Rights Revenue - Artist services and expanded-rights revenue surged by 67.7% to $327 million, driven by higher merchandising and concert promotion revenue[22] - Artist services and expanded-rights revenue for the three months ended September 30, 2025, surged 64% to $327 million from $195 million in the prior year[55] Restructuring and Impairments - Restructuring and impairments increased by 54% to $125 million for the three months ended September 30, 2025, compared to $81 million in 2024[43] - Restructuring and impairments for the twelve months ended September 30, 2025, increased by 32% to $234 million from $177 million in 2024[50] Licensing Revenue - Licensing revenue for Recorded Music decreased by 9.8% to $452 million, impacted by prior year licensing extensions[26]

Core Insights - Universal Music Group, Sony Music, and Warner Music Group have licensed their music catalogs to Klay, an AI-powered music streaming startup that enables users to remake songs using artificial intelligence [1] Group 1 - The collaboration signifies a growing trend of traditional music companies embracing AI technology to enhance user engagement and creativity [1] - Klay's platform allows users to interact with music in innovative ways, potentially reshaping the music consumption landscape [1] - This partnership may lead to new revenue streams for the music industry as AI-generated content becomes more mainstream [1]

Core Insights - Warner Music Group (WMG) has settled a copyright infringement case with AI music startup Udio and entered into a licensing deal for an AI music creation service set to launch in 2026 [1][6] - The new platform aims to create revenue streams for artists and songwriters while ensuring their work is protected [2] - The collaboration reflects a shift in the music industry's approach to AI, with major labels exploring licensing agreements with AI platforms [6][7] Group 1: Partnership and Licensing - WMG and Udio's partnership will enable a subscription service allowing users to create remixes, covers, and new songs using the voices and compositions of participating artists [2] - The platform will ensure that artists and songwriters are credited and compensated for their contributions [2][3] Group 2: Industry Context - The settlement indicates a significant shift in the music industry's stance on AI, as WMG, Universal Music Group, and Sony Music Entertainment previously sued Udio and rival Suno for copyright infringement [6] - Universal Music Group and Sony Music Entertainment are reportedly in discussions to license their works to Udio and Suno, indicating a broader trend towards collaboration with AI technology [6] Group 3: Investor Confidence - Suno has raised $250 million in a Series C funding round, achieving a post-money valuation of $2.45 billion, reflecting investor confidence in AI music technology [7]

Core Insights - Warner Music Group has reached a settlement in a copyright infringement case with AI company Udio [1] - The two companies will collaborate to launch a new platform focused on AI song creation [1] Company Summary - Warner Music Group is actively engaging in partnerships with technology firms to innovate in the music creation space [1] - The collaboration with Udio signifies a strategic move towards integrating artificial intelligence in music production [1] Industry Summary - The settlement reflects the growing intersection of the music industry and artificial intelligence technology [1] - This partnership may set a precedent for future collaborations between music companies and tech firms in the realm of AI [1]

Accessibility StatementSkip Navigation NEW YORK, Nov. 19, 2025 /PRNewswire/ -- Warner Music Group (NASDAQ: WMG) and Udio today announced a landmark agreement that resolves the companies' copyright infringement litigation and establishes a clear framework for the development of Udio's licensed AI music creation service, set to launch in 2026. Through this collaboration, Udio will develop a next-generation music creation, listening, and discovery platform powered by generative AI models trained on licensed an ...

Core Insights - Warner Music Group (WMG) and Stability AI are collaborating to develop responsible AI tools for music creation, focusing on ethical practices and protecting creators' rights [1][2] - The initiative aims to enhance the creative process for artists, songwriters, and producers by providing professional-grade tools that utilize ethically trained models [1][2] - Stability AI is recognized as a leader in commercially safe generative audio, with its Stable Audio models specifically designed for high-quality music generation [2][4] Company Overview - Warner Music Group operates in over 70 countries and includes a diverse range of renowned labels and a music publishing arm with over one million copyrights [3] - Stability AI is positioned as a creative partner for media generation and editing, having gained recognition for its contributions to the generative AI field, including the release of Stable Diffusion [4][5]