Warner Music Group Corp. (NASDAQ:WMG) Q2 2023 Earnings Conference Call May 9, 2023 8:30 PM ET Company Participants Kareem Chin - Head of IR Robert Kyncl - CEO Eric Levin - CFO Conference Call Participants Michael Morris - Guggenheim Securities Ben Swinburne - Morgan Stanley Sebastiano Petti - JPMorgan Benjamin Black - Deutsche Bank Rich Greenfield - LightShed Partners Stephen Laszczyk - Goldman Sachs Matthew Thornton - Truist Securities Tim Nollen - Macquarie Operator Welcome to Warner Music Group's Second ...

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, 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) 13-4 ...

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 ...