Financial Highlights Double-Digit Growth in Revenue and Adjusted OIBDA as both Recorded Music and Music Publishing Deliver Highest Quarterly Revenue in Company HistoryRecorded Music Results Bolstered by an Acceleration in Subscription and Ad-Supported StreamingMusic Publishing Momentum Continues with Fifth Consecutive Quarter of Increasing Revenue Growth Robust Operating Cash Flow Conversion of 65% of Adjusted OIBDALaunched Plan to Achieve $200 million in Annual Savings to be Reinvested into Growth Opportun ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 For the quarterly period ended December 31, 2023 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) 13-4271875 (I.R.S. Employer Identification No.) FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 O ...

NEW YORK, Feb. 2, 2024 /PRNewswire/ -- Today, Megan Thee Stallion and Warner Music Group (Nasdaq: WMG) announced an innovative agreement that will enable the Houston native to maintain her independence as a musician while also having access to the music company's robust global services, ranging from radio promotion to marketing worldwide. L-R: Rayna Bass (Co-President, 300 Entertainment), Desiree Perez (CEO, Roc Nation), Megan Thee Stallion, Max Lousada (CEO, Recorded Music, WMG) Through the unique stru ...

Warner Music Group Corp. (WMG) is expected to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended December 2023. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.The earnings report, which is expected to be released on February 8, 2024, might help the stock move higher if these key numbers ar ...

Warner Music Group Corp. (WMG) could be a solid choice for investors given its recent upgrade to a Zacks Rank #2 (Buy). An upward trend in earnings estimates -- one of the most powerful forces impacting stock prices -- has triggered this rating change.The Zacks rating relies solely on a company's changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure -- the Zacks Consensus Estimate.Since a changing ear ...

NEW YORK, Jan. 08, 2024 (GLOBE NEWSWIRE) -- Warner Music Group Corp. will release its financial results on Thursday, February 8, 2024, for the first quarter ended December 31, 2023, and will hold an earnings conference call that morning at 8:30 a.m. ET. To access the conference call, please register here. Once registered, you will receive an email with the dial-in number along with your personalized pin needed to join the call. We suggest you call in 10 minutes prior to the start time. If you do not anticip ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-32502 Warner Music Group Corp. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incor ...

Financial Data and Key Metrics Changes - In Q4 2023, total revenue grew by 5% and adjusted OIBDA increased by 18%, with a margin expansion of 230 basis points [12][22] - For the full year, revenue surpassed $6 billion for the first time, growing by 4% and adjusted OIBDA by 10%, with a margin expansion of 120 basis points [12][50] - Operating cash flow conversion was 56% of adjusted OIBDA for the full year, aligning with the target of 50% to 60% over a multiyear period [68] Business Line Data and Key Metrics Changes - Recorded Music revenue grew by 2%, with streaming revenue increasing by 4% for the full year [50] - In Q4, subscription streaming revenue grew by approximately 10%, while ad-supported revenue increased by 7% [23] - Music Publishing revenue grew by 15%, driven by strength across all revenue lines, with digital revenue increasing by 19% and streaming revenue by 26% [24][25] Market Data and Key Metrics Changes - The music ecosystem is experiencing healthy growth drivers, with price increases across major DSPs and evolving royalty models [20] - India has seen a significant increase in recorded music revenue, doubling over the last five years, with a growth rate of 48% in 2022 [45] Company Strategy and Development Direction - The company is focused on a two-pronged approach: price optimization and leveraging technology to enhance growth [16][17] - There is a commitment to invest more heavily in A&R and marketing in 2024 to ensure the success of new releases [28] - The strategy includes expanding local talent development in emerging markets like India and enhancing distribution partnerships [44][45] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the music industry's growth, emphasizing the importance of creativity and technology in shaping the future [39][37] - The company is confident about its momentum heading into fiscal 2024, supported by a strong release slate and industry tailwinds [12][20] Other Important Information - The company plans to file its Form 10-K during the week of November 20, 2023 [6] - A financial transformation program is on track to roll out later this fiscal year, expected to yield annualized savings of $35 million to $40 million once fully implemented [26][27] Q&A Session All Questions and Answers Question: How does the company balance investment in A&R versus technology? - The company is committed to self-funding technology investments while creating a flywheel effect that supports growth and margin expansion [71] Question: Can you discuss streaming growth as you head into fiscal '24? - Management is focused on sustained improvements and is optimistic about the streaming growth trajectory, supported by a strong release slate [73][74] Question: What is the margin expansion target for the year? - The target remains at 100 basis points on an organic basis, excluding BMG impacts, with gradual improvements expected throughout the year [77] Question: Can you provide an update on the AI feature announced with YouTube? - The company is excited about the collaboration with YouTube and emphasizes responsible engagement with partners to shape the future of AI in the music industry [78][79] Question: What is the outlook for ad-supported revenue? - The ad-supported revenue is expected to improve, with a stronger performance anticipated in the streaming space compared to the broader advertising market [103]

Financial Data and Key Metrics Changes - Total revenue grew by 10% and adjusted OIBDA increased by 18%, with margins growing by 140 basis points year-on-year [59][88] - Recorded Music revenue increased by 9%, while streaming revenue grew by 7%, reflecting double-digit growth in subscription revenue and modest growth in ad-supported revenue [59][89] - Music Publishing revenue grew by 16%, driven by strong streaming growth of 28% [60][92] Business Line Data and Key Metrics Changes - Recorded Music adjusted OIBDA increased by 16% with a margin of 20.6%, an increase of 130 basis points compared to the prior year quarter [91] - Music Publishing adjusted OIBDA increased by 32% to $74 million with a margin increasing by 310 basis points to 26.1% [93] - Artist services and expanded rights revenue increased by 14% due to higher content promotion and merchandising revenue [89] Market Data and Key Metrics Changes - The Latin division performed well, with Myke Towers reaching 1 on Spotify Global Top 50 and Yng Lvcas achieving significant chart success [62] - Emerging streaming platforms, including TikTok, Meta, and Peloton, contributed to the ad-supported revenue growth [59][90] - The overall ad-supported revenue showed sequential improvement, moving back towards growth [125] Company Strategy and Development Direction - The company is focused on diversifying revenue streams and strengthening services in the publishing business [67] - There is an emphasis on innovation around audience segmentation and price optimization in the streaming market [22][24] - The financial transformation program is being rolled out in waves, with expected annualized run rate savings of $35 million to $40 million once fully implemented [94] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the operating environment, noting a more positive outlook for growth drivers [42] - The company anticipates continued improvement in results and is focused on margin growth for fiscal 2024 [97] - There is a belief that the market can bear further price increases in subscription services, with expectations for a more regular cadence of such increases [73] Other Important Information - The company has successfully launched components of its financial transformation program in select territories [94] - The cash balance as of June 30 was $600 million, with total debt of approximately $4 billion [96] - The company is actively managing costs, including marketing, to improve margins [37][110] Q&A Session Summary Question: Can you provide insights on the impact of recent price increases by DSPs? - Management expects to see the full impact of price increases reflected in fiscal 2024, not in Q4 2023 [36] Question: What is the status of the financial transformation program? - The program is live in several markets, with benefits expected to roll in modestly in 2024 and more robustly in 2026 [18][94] Question: How is the company addressing the challenges and opportunities presented by AI? - The company is engaged with distribution partners and generative AI engines, ensuring artists have a choice in how AI is used in their music [30][32] Question: Can you elaborate on the TikTok agreement and its implications? - The agreement is designed to ensure fairness across all distributors and opens new growth drivers as TikTok rolls out subscription services [120][121] Question: What are the expectations for emerging streaming platform revenue growth? - Emerging streaming revenue continues to grow nicely, with expectations for improvement in both emerging and traditional ad-supported categories [125]

Part I. Financial Information [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for Warner Music Group Corp. as of June 30, 2023, and for the three and nine-month periods then ended [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2023, total assets were $8.150 billion, a slight increase from $7.828 billion at September 30, 2022, primarily driven by higher accounts receivable and long-term debt Condensed Consolidated Balance Sheets (in millions) | | June 30, 2023 | September 30, 2022 | | :--- | :--- | :--- | | **Total current assets** | $2,317 | $2,139 | | **Total assets** | $8,150 | $7,828 | | **Total current liabilities** | $3,290 | $3,368 | | **Long-term debt** | $3,988 | $3,732 | | **Total liabilities** | $7,851 | $7,660 | | **Total equity** | $299 | $168 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2023, revenue was $1.564 billion, up from $1.432 billion in the prior-year period, with net income stable at $124 million Statements of Operations Highlights (in millions, except per share data) | Metric | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $1,564 | $1,432 | $4,451 | $4,422 | | **Operating Income** | $189 | $146 | $578 | $551 | | **Net Income** | $124 | $125 | $285 | $405 | | **Net Income attributable to WMG** | $122 | $124 | $278 | $403 | | **Diluted EPS (Class A & B)** | $0.23 | $0.24 | $0.53 | $0.77 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended June 30, 2023, net cash provided by operating activities was $349 million, while net cash used in investing activities significantly decreased to $104 million due to lower acquisition spending Cash Flow Summary for Nine Months Ended June 30 (in millions) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $349 | $336 | | **Net cash used in investing activities** | $(104) | $(763) | | **Net cash (used in) provided by financing activities** | $(233) | $280 | | **Net increase (decrease) in cash** | $16 | $(154) | | **Cash and equivalents at end of period** | $600 | $345 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed information on the company's accounting policies and financial results, including business description, revenue recognition, debt structure, and a recent restructuring plan - The company's business is divided into two main operations: Recorded Music (discovery, development, marketing, and sale of music) and Music Publishing (generating revenue from the use of musical compositions)[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) - In March 2023, the company announced a restructuring plan involving a **4% headcount reduction** (approx. **270 people**), expecting to incur **$41 million in severance costs**[70](index=70&type=chunk) - Total long-term debt as of June 30, 2023, was approximately **$4.0 billion**, with the company engaging in several debt-related transactions to replace LIBOR with SOFR-based rates[52](index=52&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk) Revenue Disaggregation for Nine Months Ended June 30 (in millions) | Segment/Type | 2023 | 2022 | | :--- | :--- | :--- | | **Recorded Music** | | | | Digital | $2,445 | $2,475 | | Physical | $377 | $440 | | Artist services & expanded-rights | $555 | $563 | | Licensing | $287 | $244 | | **Total Recorded Music** | **$3,664** | **$3,722** | | **Music Publishing** | | | | Digital | $477 | $404 | | Performance | $130 | $119 | | Mechanical | $46 | $37 | | Synchronization | $126 | $133 | | **Total Music Publishing** | **$790** | **$704** | | **Total Revenues** | **$4,451** | **$4,422** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition, detailing segment performance, cost structures, and liquidity management - Management uses OIBDA (operating income before depreciation and amortization) as a key performance indicator, with **Q3 2023 OIBDA increasing 18% to $275 million** and the margin improving to **18%**[116](index=116&type=chunk)[157](index=157&type=chunk) - A restructuring plan announced in March 2023 is expected to generate pre-tax cost savings of approximately **$19 million in fiscal 2023** and **$48 million on an annualized basis in fiscal 2024**[133](index=133&type=chunk)[134](index=134&type=chunk) - The company's financial transformation initiative, launched in 2019, is ongoing with expected upfront costs of **$235 million** and annualized run-rate savings of **$35-$40 million** once fully implemented[249](index=249&type=chunk) [Results of Operations - Three Months Ended June 30, 2023](index=37&type=section&id=Results%20of%20Operations%20-%20Three%20Months%20Ended%20June%2030%2C%202023) For the third quarter of fiscal 2023, total revenues increased by 9% to $1.564 billion, driven by growth in both Recorded Music and Music Publishing segments Q3 2023 vs Q3 2022 Revenue by Type (in millions) | Revenue Type | Q3 2023 | Q3 2022 | % Change | | :--- | :--- | :--- | :--- | | **Recorded Music** | $1,282 | $1,189 | 8% | | **Music Publishing** | $283 | $245 | 16% | | **Total Revenues** | $1,564 | $1,432 | 9% | - Recorded Music streaming revenue grew **6% to $822 million**, benefiting from a stronger release schedule and recovery in ad-supported revenue[144](index=144&type=chunk) - Music Publishing digital revenue increased **26%**, driven by growth in streaming, digital deal renewals, and a **$9 million revenue true-up**[146](index=146&type=chunk) Q3 2023 vs Q3 2022 OIBDA by Segment (in millions) | Segment | Q3 2023 | Q3 2022 | % Change | | :--- | :--- | :--- | :--- | | **Recorded Music OIBDA** | $261 | $224 | 17% | | **Music Publishing OIBDA** | $73 | $57 | 28% | | **Total OIBDA** | $275 | $233 | 18% | [Results of Operations - Nine Months Ended June 30, 2023](index=48&type=section&id=Results%20of%20Operations%20-%20Nine%20Months%20Ended%20June%2030%2C%202023) For the nine months ended June 30, 2023, total revenues increased 1% to $4.451 billion, with operating income rising 5% to $578 million, aided by a divestiture gain offsetting restructuring costs Nine Months 2023 vs 2022 Revenue by Type (in millions) | Revenue Type | Nine Months 2023 | Nine Months 2022 | % Change | | :--- | :--- | :--- | :--- | | **Recorded Music** | $3,664 | $3,722 | -2% | | **Music Publishing** | $790 | $704 | 12% | | **Total Revenues** | $4,451 | $4,422 | 1% | - Recorded Music revenue was negatively impacted by a lighter release schedule, an extra week in the prior year, and a market-related slowdown in ad-supported streaming revenue[190](index=190&type=chunk) - Music Publishing revenue growth was driven by an **18% increase in digital revenue** and a **9% increase in performance revenue**, reflecting continued growth in streaming and recovery from COVID disruptions[192](index=192&type=chunk) - A pre-tax gain of **$41 million** from the sale of certain sound recording rights was recorded, which was offset by **$41 million in restructuring costs**[204](index=204&type=chunk)[203](index=203&type=chunk) [Financial Condition and Liquidity](index=60&type=section&id=Financial%20Condition%20and%20Liquidity) As of June 30, 2023, the company had $600 million in cash and equivalents and $3.988 billion in debt, with sufficient liquidity for the next twelve months Financial Condition (in billions) | Metric | June 30, 2023 | September 30, 2022 | | :--- | :--- | :--- | | **Cash and equivalents** | $0.600 | $0.584 | | **Total debt (net)** | $3.988 | $3.732 | | **Net debt** | $3.388 | $3.148 | - The company's weighted-average interest rate on debt was **4.1%** as of June 30, 2023, with the nearest-term debt maturity in 2028[250](index=250&type=chunk) - On May 10, 2023, the board declared a cash dividend of **$0.16 per share**, with total dividends paid in the nine months ended June 30, 2023, amounting to **$251 million**[260](index=260&type=chunk)[261](index=261&type=chunk) Adjusted EBITDA Reconciliation for Twelve Months Ended June 30, 2023 (in millions) | Metric | Amount | | :--- | :--- | | Net Income | $435 | | Income tax expense | $149 | | Interest expense, net | $136 | | Depreciation and amortization | $335 | | Other Adjustments (Restructuring, etc.) | $94 | | **Adjusted EBITDA** | **$1,260** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=67&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from foreign currency exchange rates, interest rates, and inflation, using foreign exchange forward contracts and interest rate swaps to manage these exposures - The company uses foreign currency forward contracts to manage exposure on major currencies, holding contracts for the sale of **$172 million** and purchase of **$98 million** of foreign currencies as of June 30, 2023[274](index=274&type=chunk) - Of the **$4.028 billion** in total debt, **$1.314 billion** is variable-rate, with an interest rate swap effectively fixing the rate on a portion, resulting in **80% of total debt being effectively fixed-rate**[276](index=276&type=chunk) [Item 4. Controls and Procedures](index=68&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2023, with no material changes in internal control over financial reporting during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures are effective at a reasonable assurance level[283](index=283&type=chunk) - No changes occurred during the three months ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[284](index=284&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=69&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various claims and legal proceedings arising in the ordinary course of business, which management does not expect to have a material adverse effect on its financial condition - While litigation has inherent uncertainties, the company does not currently expect pending legal matters to have a material adverse impact on its financial condition or operations[286](index=286&type=chunk) [Item 1A. Risk Factors](index=69&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended September 30, 2022 - No material changes to risk factors from the Annual Report on Form 10-K for the fiscal year ended September 30, 2022, are reported[287](index=287&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) This item is not applicable for the reporting period - Not applicable[288](index=288&type=chunk) [Item 3. Defaults Upon Senior Securities](index=69&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable for the reporting period - Not applicable[289](index=289&type=chunk) [Item 4. Mine Safety Disclosures](index=69&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable for the reporting period - Not applicable[290](index=290&type=chunk) [Item 5. Other Information](index=69&type=section&id=Item%205.%20Other%20Information) This item is not applicable for the reporting period - Not applicable[291](index=291&type=chunk) [Item 6. Exhibits](index=70&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including amendments to credit agreements, an indemnification agreement, and officer certifications - Exhibits filed include amendments to the Senior Term Loan Credit Agreement, CEO and CFO certifications, and XBRL data files[294](index=294&type=chunk)