Sabre Q2 2025 Earnings Release [Performance Overview](index=1&type=section&id=Performance%20Overview) Sabre's second quarter of 2025 was marked by significant strategic actions, including the $1.1 billion sale of its Hospitality Solutions business to reduce leverage, while achieving a strong 6 percentage point year-over-year improvement in operating margin despite weaker air distribution bookings Key Highlights Q2 2025 Financial Highlights | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | Revenue | $687 million | -1% | | Operating Income | $89 million | +$40 million | | Operating Margin | 13% | +6 p.p. | | Net Loss Attributable to Common Stockholders | $256 million | Increased from $70M loss | | Adjusted EBITDA | $118 million | +7% | | Normalized Adjusted EBITDA | $127 million | +6% | - Closed the sale of its Hospitality Solutions business for **$1.1 billion** in July 2025[2](index=2&type=chunk) - Repaid over **$1 billion** of debt, including **~$825 million** from the Hospitality Solutions sale proceeds, and refinanced **$1.325 billion** of debt to extend maturities to 2030[2](index=2&type=chunk) - Signed new agency agreements, including with Christopherson Business Travel, demonstrating continued commercial momentum in air distribution[2](index=2&type=chunk) Management Commentary - CEO Kurt Ekert acknowledged that Q2 results were impacted by weaker-than-anticipated air distribution bookings, which offset gains from growth strategies, leading to an updated full-year outlook[3](index=3&type=chunk) - Management stated the current volume pressure is considered **"transitory"** and reaffirmed its focus on two strategic priorities: reducing leverage and driving sustainable growth through innovation[3](index=3&type=chunk)[4](index=4&type=chunk) [Financial Results](index=2&type=section&id=Financial%20Results) Sabre's Q2 2025 revenue decreased 1% to $687 million, but operating income surged 83% to $89 million due to cost reductions, though net loss widened to $256 million primarily from debt extinguishment and higher taxes, resulting in negative $240 million Free Cash Flow Consolidated Financial Performance Q2 2025 vs Q2 2024 Financial Performance (in thousands, except EPS) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $687,149 | $695,050 | (1)% | | Operating Income | $89,134 | $48,722 | 83% | | Net loss attributable to common stockholders | $(256,364) | $(69,760) | (267)% | | Diluted net loss per share (EPS) | $(0.51) | $(0.18) | (183)% | | Adjusted EBITDA | $118,255 | $110,335 | 7% | - The increase in net loss was primarily driven by an **$85 million** loss on the extinguishment of debt from refinancing activities and an **$85 million** increase in the provision for income taxes from continuing operations[8](index=8&type=chunk) - The improvement in operating income was driven by lower labor costs from prior cost reduction plans, reduced technology expenses from cloud migrations, and a decrease in tax litigation reserves[6](index=6&type=chunk) Segment Performance Q2 2025 Segment Revenue | Segment | Q2 2025 Revenue | Change (YoY) | Reason for Change | | :--- | :--- | :--- | :--- | | Distribution | $546 million | -1% | Decrease in air distribution bookings, partly offset by higher hotel bookings | | IT Solutions | $141 million | -2% | Impact of previously disclosed de-migrated carriers, partly offset by higher license fees | - Total bookings, net of cancellations, were **90 million**, a **1% decrease** from Q2 2024[7](index=7&type=chunk) Cash Flow Analysis - Free Cash Flow was negative **$240 million** in Q2 2025, a significant decrease from positive **$7 million** in Q2 2024[10](index=10&type=chunk) - The negative Free Cash Flow includes a **$227 million** payment-in-kind interest payment recorded to cash flow from operations due to refinancing activity, with pro forma Free Cash Flow, excluding this, being negative **$2 million**[10](index=10&type=chunk) Q2 2025 Cash Flow Summary (vs Q2 2024, in millions) | Cash Flow Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Cash used in operating activities | $(218) | $26 (provided by) | | Cash used in investing activities | $(23) | $(19) | | Cash provided by financing activities | $21 | $(24) (used in) | [Business and Financial Pro Forma Financial Outlook](index=5&type=section&id=Business%20and%20Financial%20Pro%20Forma%20Financial%20Outlook) Sabre provides a pro forma financial outlook for Q3 and full-year 2025, adjusting for the Hospitality Solutions sale, with guidance across three air distribution volume scenarios projecting full-year Pro Forma Adjusted EBITDA between $530 million and $570 million and Pro Forma Free Cash Flow between $100 million and $140 million Pro Forma Basis Explanation - The outlook is provided on a pro forma basis to give effect to the sale of the Hospitality Solutions business, which is now classified as a discontinued operation[13](index=13&type=chunk) - Pro forma adjustments remove costs previously allocated to Hospitality Solutions and exclude the impact of a **$227 million** payment-in-kind interest payment from pro forma Free Cash Flow to enhance comparability of the company's go-forward operations[13](index=13&type=chunk)[15](index=15&type=chunk) Q3 and Full-Year 2025 Scenarios Q3 2025 Pro Forma Financial Outlook Scenarios | Air Distribution Volume (YoY Growth) | 2% | 4% | 6% | | :--- | :--- | :--- | :--- | | Revenue Growth | Low single digit | Low single digit | Mid single digit | | Pro Forma Adjusted EBITDA (in millions) | ~$140 (+15% YoY) | ~$145 (+19% YoY) | ~$150 (+23% YoY) | | Pro Forma Free Cash Flow (in millions) | ~$40 | ~$45 | ~$50 | Full Year 2025 Pro Forma Financial Outlook Scenarios | Air Distribution Volume (YoY Growth) | 0.5% | 2% | 3.5% | | :--- | :--- | :--- | :--- | | Revenue Growth | Flat | Low single digit | Low single digit | | Pro Forma Adjusted EBITDA (in millions) | ~$530 (+9% YoY) | ~$550 (+13% YoY) | ~$570 (+18% YoY) | | Pro Forma Free Cash Flow (in millions) | ~$100 | ~$120 | ~$140 | - The company expects its end-of-year 2025 cash balance to be greater than **$750 million**[17](index=17&type=chunk) [Consolidated Financial Statements (Unaudited)](index=12&type=section&id=Consolidated%20Financial%20Statements%20(Unaudited)) This section presents Sabre Corporation's unaudited consolidated financial statements, including the Statement of Operations showing a $256.5 million net loss for Q2 2025, a Balance Sheet with $4.42 billion in total assets, and a Statement of Cash Flows detailing a $298.4 million net decrease in cash for the first six months of 2025 Consolidated Statements of Operations Statement of Operations Highlights - Three Months Ended June 30 (in thousands) | Line Item | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | $687,149 | $695,050 | | Operating income | $89,134 | $48,722 | | Loss from continuing operations | $(201,018) | $(69,731) | | Loss from discontinued operations, net of tax | $(55,514) | $246 (income) | | Net loss | $(256,532) | $(69,485) | Consolidated Balance Sheets Balance Sheet Highlights (in thousands) | Line Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $426,118 | $724,479 | | Total current assets | $952,558 | $1,163,218 | | Total assets | $4,419,145 | $4,634,929 | | Long-term debt | $4,997,092 | $4,834,776 | | Total liabilities | $6,111,560 (calculated) | $6,226,598 (calculated) | | Total stockholders' deficit | $(1,804,310) | $(1,604,699) | Consolidated Statements of Cash Flows Cash Flow Highlights - Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Cash used in operating activities | $(281,841) | $(29,856) | | Cash used in investing activities | $(30,083) | $(45,850) | | Cash provided by financing activities | $34,500 | $54,124 | | Decrease in cash, cash equivalents and restricted cash | $(298,375) | $(35,592) | [Non-GAAP Financial Measures & Reconciliations](index=15&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) This section defines and reconciles non-GAAP financial measures like Adjusted EBITDA, Adjusted Net Loss, and Free Cash Flow, which management uses to monitor core operations by excluding specific items, with Q2 2025 Adjusted EBITDA reconciled to $118.3 million Definitions of Non-GAAP Measures - Adjusted EBITDA is defined as loss from continuing operations adjusted for items including D&A, interest expense, stock-based compensation, and restructuring costs[42](index=42&type=chunk) - Normalized Adjusted EBITDA is Adjusted EBITDA further adjusted for estimated costs historically allocated to the sold Hospitality Solutions business[43](index=43&type=chunk) - Free Cash Flow is defined as cash used in operating activities less cash used for additions to property and equipment[45](index=45&type=chunk) Reconciliation of Net Loss to Adjusted EBITDA Reconciliation to Adjusted EBITDA - Q2 2025 (in thousands) | Line Item | Q2 2025 | | :--- | :--- | | Loss from continuing operations | $(201,018) | | Adjustments: | | | Depreciation and amortization | $25,482 | | Interest expense, net | $111,244 | | Loss on extinguishment of debt | $85,182 | | Stock-based compensation | $11,290 | | Provision for income taxes | $91,262 | | Other adjustments | $(5,187) | | **Adjusted EBITDA** | **$118,255** | Reconciliation of Free Cash Flow Free Cash Flow Reconciliation - Q2 2025 (in thousands) | Line Item | Q2 2025 | | :--- | :--- | | Cash used in operating activities | $(217,881) | | Additions to property and equipment | $(22,279) | | **Free Cash Flow** | **$(240,160)** |

[Executive Summary & Turnaround Plan](index=1&type=section&id=Executive%20Summary%20%26%20Turnaround%20Plan) [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) Krispy Kreme reported a significant GAAP net loss in Q2 2025, primarily due to a large impairment charge and the terminated McDonald's partnership | Metric | Q2 2025 Value | Note | | :--- | :--- | :--- | | Net Revenue | $379.8 million | - | | Organic Revenue Decline | 0.8% | YoY | | GAAP Net Loss | $441.1 million | Includes $406.9M in impairment charges | | Adjusted EBITDA | $20.1 million | - | | Global Points of Access (POA) | 18,113 | +14.3% YoY | - The company's Q2 results were primarily impacted by **unsustainable operating costs** related to the McDonald's USA partnership, which ended on July 2, 2025[2](index=2&type=chunk) [Turnaround Plan](index=1&type=section&id=Turnaround%20Plan) The company launched a four-part turnaround plan to deleverage, improve capital returns, expand margins, and drive profitable growth - The turnaround plan is built on four key pillars: * **Refranchising:** Improving financial flexibility by refranchising international markets and restructuring a U.S. joint venture * **Driving Return on Invested Capital:** Reducing capital intensity by leveraging existing assets and focusing on franchisee development * **Expanding Margins:** Increasing operational efficiency, including outsourcing U.S. logistics * **Driving Sustainable, Profitable Growth:** Focusing on profitable revenue streams in the U.S. market[4](index=4&type=chunk) [Financial Performance](index=2&type=section&id=Financial%20Performance) [Consolidated Financial Results (Q2 2025)](index=2&type=section&id=Consolidated%20Financial%20Results%20(Q2%202025)) Consolidated net revenue decreased by **13.5%** in Q2 2025, resulting in a **$441.1 million GAAP Net Loss** primarily from impairment and the McDonald's partnership impact | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Revenue | $379.8M | $438.8M | (13.5)% | | Organic Revenue | $371.7M | $374.6M | (0.8)% | | GAAP Net Loss | $(441.1)M | $(4.9)M | nm | | GAAP Diluted EPS | $(2.55) | $(0.03) | $(2.52) | | Adjusted EBITDA | $20.1M | $54.7M | (63.3)% | | Adjusted EBITDA Margin | 5.3% | 12.5% | (720) bps | | Adjusted Diluted EPS | $(0.15) | $0.05 | $(0.20) | - The **$59.0 million decline** in net revenue was primarily caused by a **$64.2 million reduction** associated with the sale of a majority stake in Insomnia Cookies in Q3 2024[6](index=6&type=chunk) - A non-cash goodwill and other asset impairment charge totaling **$406.9 million** was the main driver of the significant GAAP Net Loss[7](index=7&type=chunk) [Segment Performance (Q2 2025)](index=2&type=section&id=Segment%20Performance%20(Q2%202025)) Segment performance in Q2 2025 was mixed, with U.S. declines from divestiture and partnership termination, and International organic growth [U.S. Segment](index=2&type=section&id=U.S.%20Segment) - Net revenue declined by **20.5%** (**$59.2 million**), primarily due to the **$64.2 million impact** from the sale of Insomnia Cookies[9](index=9&type=chunk) - Organic revenue declined by **3.1%** (**$6.9 million**) due to consumer softness and strategic door closures[9](index=9&type=chunk) - U.S. Adjusted EBITDA decreased by **69.6%** (**$22.7 million**), driven by the Insomnia Cookies sale, the terminated McDonald's partnership, and lower transaction volumes[10](index=10&type=chunk) [International Segment](index=3&type=section&id=International%20Segment) - Organic revenue grew by **5.9%** (**$7.4 million**), led by strong performance in Canada, Japan, and Mexico[11](index=11&type=chunk) - Adjusted EBITDA declined by **15.9%** (**$3.4 million**), with margins falling **360 basis points** to **13.7%**, primarily due to the ongoing turnaround in the U.K[12](index=12&type=chunk) [Market Development Segment](index=3&type=section&id=Market%20Development%20Segment) - Net revenue declined by **30.2%** (**$7.3 million**), and organic revenue declined by **14.2%**, as growth in new markets was offset by the timing of product and equipment sales to franchisees[13](index=13&type=chunk) - Adjusted EBITDA decreased by **30.5%** (**$3.9 million**), with a slight margin decline of **20 basis points** to **52.9%**[13](index=13&type=chunk) [Financial Position and Capital Management](index=3&type=section&id=Financial%20Position%20and%20Capital%20Management) [Balance Sheet and Liquidity](index=3&type=section&id=Balance%20Sheet%20and%20Liquidity) Krispy Kreme maintained **$243.8 million** in total available liquidity as of June 29, 2025, and amended its credit agreement while remaining compliant with covenants - Total available liquidity stood at **$243.8 million**, composed of **$21.3 million** in cash and **$222.5 million** in undrawn credit capacity[16](index=16&type=chunk) - The company amended its credit agreement, adding **$125.0 million** in term loans to pay down its revolving credit facility[15](index=15&type=chunk) | Metric | As of June 29, 2025 | | :--- | :--- | | Net Debt | $939.4 million | | Net Leverage Ratio | 7.5x | [Capital Allocation and Expenditures](index=3&type=section&id=Capital%20Allocation%20and%20Expenditures) The company is actively managing capital by halting dividends, selling Insomnia Cookies for **$75 million** to reduce debt, and pursuing refranchising - The quarterly cash dividend has been halted to preserve capital[17](index=17&type=chunk) - The remaining ownership stake in Insomnia Cookies was sold, generating **$75 million** in cash proceeds used for debt reduction[17](index=17&type=chunk) - The company is actively pursuing refranchising of markets including Australia, New Zealand, Japan, Mexico, and the U.K. to enhance financial flexibility and pay down debt[18](index=18&type=chunk) - Capital expenditures for the first half of 2025 totaled **$54.1 million** (**7.2% of net revenue**), but future investment in new capacity will be curtailed[14](index=14&type=chunk) [Key Business Developments](index=3&type=section&id=Key%20Business%20Developments) [McDonald's USA Partnership Termination](index=3&type=section&id=McDonald's%20USA%20Partnership%20Termination) Krispy Kreme and McDonald's USA mutually terminated their partnership effective July 2, 2025, due to misaligned operating costs - The partnership was terminated effective July 2, 2025, by mutual agreement[19](index=19&type=chunk) - The primary reason for termination was the failure to align Krispy Kreme's operating costs with the unit demand from McDonald's locations[19](index=19&type=chunk) [Goodwill and Other Asset Impairments](index=3&type=section&id=Goodwill%20and%20Other%20Asset%20Impairments) The company recognized **$406.9 million** in non-cash impairment charges in Q2 2025, triggered by stock price decline and revised forecasts - A cumulative, non-cash partial goodwill impairment charge of **$356.0 million** was recognized in Q2 2025[20](index=20&type=chunk) - Impairment indicators included a significant and sustained decline in stock price and market capitalization, and downward revisions to internal forecasts[20](index=20&type=chunk) - Additional non-cash charges of **$22.1 million** for long-lived assets and **$28.9 million** for lease impairment and termination costs were recorded, partly due to the termination of the McDonald's agreement[21](index=21&type=chunk) - The impairment charges do not impact the company's compliance with its debt covenants[22](index=22&type=chunk) [Key Operating Metrics](index=2&type=section&id=Key%20Operating%20Metrics) [Global Points of Access and Hubs](index=2&type=section&id=Global%20Points%20of%20Access%20and%20Hubs) Global Points of Access grew **14.3%** to **18,113** in Q2 2025, including McDonald's locations subsequently closed, and total production hubs increased | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Global Points of Access | 18,113 | 15,853 | +14.3% | | Total Hubs | 430 | 419 | +2.6% | - The Q2 2025 Global Points of Access count includes approximately **2,400 McDonald's doors** that were exited in Q3 2025[49](index=49&type=chunk) [Sales per Hub and Digital Sales](index=2&type=section&id=Sales%20per%20Hub%20and%20Digital%20Sales) Sales per Hub declined slightly in both U.S. and International segments, while digital sales as a percentage of doughnut shop sales increased to **18.0%** | Metric (Trailing Four Quarters) | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Sales per Hub (U.S.) | $4.9M | $5.0M | (2.0)% | | Sales per Hub (International) | $9.8M | $9.9M | (1.0)% | | Digital Sales % of Doughnut Shop Sales | 18.0% | 16.4% | +160 bps | [Financial Statements (Unaudited)](index=6&type=section&id=Financial%20Statements%20(Unaudited)) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section provides the unaudited consolidated statement of operations for the 13 and 26 weeks ended June 29, 2025, detailing revenues, costs, expenses, and net loss [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the unaudited consolidated balance sheet as of June 29, 2025, outlining the company's assets, liabilities, and shareholders' equity [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the unaudited consolidated cash flows from operating, investing, and financing activities for the 26 weeks ended June 29, 2025 [Reconciliation of Non-GAAP Financial Measures](index=9&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) [Reconciliation of Adjusted EBITDA and Adjusted EBIT](index=9&type=section&id=Reconciliation%20of%20Adjusted%20EBITDA%20and%20Adjusted%20EBIT) This section provides a detailed reconciliation from GAAP Net Loss to non-GAAP Adjusted EBIT and Adjusted EBITDA, detailing key adjustments including goodwill impairment - Adjusted EBITDA is reconciled from Net Loss by adding back interest, taxes, D&A, and other items such as share-based compensation, strategic initiative costs, and impairment charges[36](index=36&type=chunk)[40](index=40&type=chunk) [Reconciliation of Adjusted Net (Loss)/Income](index=11&type=section&id=Reconciliation%20of%20Adjusted%20Net%20(Loss)%2FIncome) This section reconciles GAAP Net Loss to non-GAAP Adjusted Net (Loss)/Income and Adjusted EPS, detailing adjustments for goodwill impairment and strategic initiatives - Adjusted Net (Loss)/Income is reconciled from Net Loss by adjusting for items such as share-based compensation, goodwill impairment, strategic initiatives, and the tax impact of these adjustments[38](index=38&type=chunk)[42](index=42&type=chunk) [Reconciliation of Organic Revenue](index=14&type=section&id=Reconciliation%20of%20Organic%20Revenue) This section reconciles total net revenue growth to organic revenue growth by segment, excluding impacts from divestitures, acquisitions, and foreign currency - Organic revenue growth is calculated by excluding the impacts of acquisitions, divestitures (like Insomnia Cookies), and foreign currency translation from total net revenue growth[45](index=45&type=chunk)

Part I. Financial Information [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) For the first six months of 2025, the company reported slightly increased revenue and a significantly reduced net loss due to the absence of prior-year impairment charges, alongside a major debt refinancing that restructured its debt and impacted cash flows [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets slightly decreased to **$5.07 billion**, total liabilities increased to **$5.11 billion**, and shareholders' equity shifted to a **$39.9 million** deficit from **$84.0 million** equity at year-end 2024, primarily due to net loss and debt refinancing Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $247,138 | $175,515 | | Cash and cash equivalents | $56,390 | $16,848 | | **Total Assets** | **$5,071,980** | **$5,150,827** | | **Total Current Liabilities** | $253,142 | $213,790 | | **Total Liabilities** | **$5,111,888** | **$5,066,805** | | **Total Shareholders' Equity (Deficit)** | **($39,908)** | **$84,022** | [Unaudited Condensed Consolidated Statements of Loss and Comprehensive Loss](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Loss%20and%20Comprehensive%20Loss) For Q2 2025, revenues slightly increased to **$241.6 million**, and the company reported a significantly improved net loss of **$62.6 million** (or **$3.81 per share**) compared to **$576.7 million** in Q2 2024, primarily due to the absence of a **$553.7 million** goodwill impairment charge Statement of Loss Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $241,570 | $233,476 | $472,900 | $467,984 | | **Operating Income (Loss)** | $16,578 | ($523,927) | $26,320 | ($1,010,363) | | Loss on impairment | $0 | $553,701 | $0 | $1,072,751 | | **Net Loss** | **($62,640)** | **($576,727)** | **($133,959)** | **($1,116,416)** | | **Net Loss Per Share** | **($3.81)** | **($35.78)** | **($8.19)** | **($69.18)** | [Unaudited Condensed Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) Shareholders' equity transitioned from **$84.0 million** at year-end 2024 to a **$39.9 million** deficit as of June 30, 2025, primarily due to the **$134.0 million** net loss for the six-month period - The company's retained deficit increased from **$(2,145.1) million** at the end of 2024 to **$(2,279.1) million** at June 30, 2025, due to the net loss incurred during the first half of the year[21](index=21&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash from operating activities decreased to **$31.2 million**, investing activities used **$63.5 million**, and financing activities provided **$69.9 million**, a significant reversal from the prior year, largely due to **$130 million** in new borrowings Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $31,181 | $68,187 | | **Net Cash used in Investing Activities** | ($63,489) | ($55,989) | | **Net Cash from (used in) Financing Activities** | $69,924 | ($34,523) | | **Net Change in Cash** | $37,616 | ($22,325) | [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail significant corporate actions, including the company's name change to Claritev Corporation, a 1-for-40 reverse stock split in 2024, a major debt refinancing in January 2025, and disclosures on revenue, goodwill (with no impairments in 2025), derivatives, and ongoing legal matters - On February 17, 2025, the company changed its name from "MultiPlan Corporation" to "**Claritev Corporation**" and its ticker symbol to "**CTEV**"[26](index=26&type=chunk) - A **one-for-forty (1-for-40) reverse stock split** of its Class A common stock became effective on **September 20, 2024**. All share and per-share data have been retroactively adjusted[29](index=29&type=chunk)[30](index=30&type=chunk) - In **January 2025**, the company completed a major **Refinancing Transaction**, exchanging existing notes and term loans for new first lien term loans and notes with extended maturities, and establishing a new **$350 million revolving credit facility**[56](index=56&type=chunk) - The company recorded **no goodwill impairment in the first six months of 2025**, compared to a significant impairment loss of **$1,072.8 million** in the same period of 2024[42](index=42&type=chunk)[75](index=75&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reported a **1.1%** revenue increase for the first six months of 2025, driven by Network-Based and Payment and Revenue Integrity Services, with a significantly narrowed net loss due to the absence of 2024 impairment charges, while a January 2025 debt refinancing extended maturities and Adjusted EBITDA slightly increased to **$296.1 million** - The company initiated its first international expansion into the **Middle East and North Africa (MENA) region** through a strategic partnership with Claims Care Revenue Cycle Management LLC[98](index=98&type=chunk) Revenue by Service Line (in thousands) | Service Line | Six Months 2025 | Six Months 2024 | Change % | | :--- | :--- | :--- | :--- | | Network-Based Services | $101,015 | $91,878 | +9.9% | | Analytics-Based Services | $310,396 | $319,988 | -3.0% | | Payment and Revenue Integrity | $61,489 | $56,118 | +9.6% | | **Total Revenues** | **$472,900** | **$467,984** | **+1.1%** | Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Metric | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | | Net loss | ($133,959) | ($1,116,416) | | Adjustments | $430,056 | $1,409,876 | | **Adjusted EBITDA** | **$296,097** | **$293,460** | - General and administrative expenses increased by **49.2%** for the six months ended June 30, 2025, primarily due to **$15.7 million** in transformation costs and **$5.5 million** in losses on asset disposals[143](index=143&type=chunk) - As of June 30, 2025, the company had **$67.3 million** in cash and cash equivalents (including restricted cash) and **$263.6 million** of availability under its revolving credit facility[154](index=154&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that as of June 30, 2025, there have been no material changes in the market risks it faces compared to those described in its 2024 Annual Report - There were no material changes in the market risks described in the company's 2024 Annual Report as of June 30, 2025[188](index=188&type=chunk) [Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, noting the implementation of a new enterprise resource planning (ERP) system during the quarter, which led to new and modified internal controls - The principal executive and financial officers concluded that disclosure controls and procedures were effective as of June 30, 2025[190](index=190&type=chunk) - During the second quarter of 2025, the company completed the implementation of a **new enterprise resource planning (ERP) system**, resulting in changes to its internal control over financial reporting[191](index=191&type=chunk) Part II - Other Information [Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings arising from the ordinary course of business, which management does not expect to have a material adverse effect on its financial condition or operations - The company is a defendant in various lawsuits and regulatory investigations arising from the ordinary course of business but does not expect them to have a material adverse effect[194](index=194&type=chunk) [Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) While no material changes occurred to overall risk factors from the 2024 Annual Report, new risks emerged from international expansion, including challenges in managing foreign operations, complying with international laws, and increased susceptibility to global economic and political events - The company faces **new risks associated with its international business expansion**, including managing foreign operations, complying with international laws, and dealing with political or economic instability in foreign countries[201](index=201&type=chunk)[206](index=206&type=chunk) - As the company expands its international footprint, it becomes more susceptible to global events beyond its control, such as changes in trade policy, military conflict, and public health crises[203](index=203&type=chunk) [Other Information](index=48&type=section&id=Item%205.%20Other%20Information) During the second quarter of 2025, no officers or directors of the company adopted or terminated any Rule 10b5-1 trading plans for the purchase or sale of company securities - **No officers or directors adopted or terminated any Rule 10b5-1(c) trading arrangements** during the three months ended June 30, 2025[208](index=208&type=chunk) [Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act of 2002, and financial statements in Inline XBRL format - The report includes certifications from the CEO and CFO pursuant to **Sections 302 and 906 of the Sarbanes-Oxley Act of 2002**[208](index=208&type=chunk)

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 June 30, 2025 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 001-36352 AKEBIA THERAPEUTICS, INC. (Exact name of registrant as specified in its charter) (State or other jurisd ...

```markdown [PART I. FINANCIAL INFORMATION](index=4&type=section&id=Part%20I.%20Financial%20Information) This section presents unaudited consolidated financial statements and management's analysis of financial condition and operations [ITEM 1. FINANCIAL STATEMENTS (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents unaudited consolidated financial statements, including balance sheets, income, cash flow, equity, and notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents condensed consolidated balance sheets, detailing changes in assets, liabilities, and equity Condensed Consolidated Balance Sheets (Millions) | Metric | June 30, 2025 (Millions) | September 30, 2024 (Millions) | Change (Millions) | % Change | | :-------------------------------- | :----------------------- | :---------------------------- | :---------------- | :------- | | Cash and equivalents | $527 | $694 | $(167) | -24.1% | | Total current assets | $2,678 | $2,643 | $35 | 1.3% | | Total assets | $9,777 | $9,155 | $622 | 6.8% | | Total current liabilities | $4,050 | $3,897 | $153 | 3.9% | | Total liabilities | $8,965 | $8,480 | $485 | 5.7% | | Total equity | $812 | $675 | $137 | 20.3% | - **Total assets increased by $622 million, or 6.8%**, primarily driven by increases in royalty advances, intangible assets subject to amortization, and goodwill[9](index=9&type=chunk) - **Total equity increased by $137 million, or 20.3%**, largely due to an increase in additional paid-in capital and noncontrolling interest, partially offset by an accumulated deficit[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section presents condensed consolidated statements of operations, detailing revenue, expenses, and net income/loss Condensed Consolidated Statements of Operations Table | Metric | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Change (Millions) | % Change | | :--------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------- | :------- | | Revenue | $1,689 | $1,554 | $135 | 8.7% | | Total costs and expenses | $(1,520) | $(1,348) | $(172) | 12.8% | | Operating income | $169 | $207 | $(38) | -18.4% | | Net (loss) income | $(16) | $141 | $(157) | -111.3% | | Net (loss) income attributable to WMG Corp. | $(16) | $139 | $(155) | -111.5% | | Class A – Basic and Diluted EPS | $(0.03) | $0.27 | $(0.30) | -111.1% | | Class B – Basic and Diluted EPS | $(0.03) | $0.27 | $(0.30) | -111.1% | Condensed Consolidated Statements of Operations Table | Metric | Nine Months Ended June 30, 2025 (Millions) | Nine Months Ended June 30, 2024 (Millions) | Change (Millions) | % Change | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :---------------- | :------- | | Revenue | $4,839 | $4,796 | $43 | 0.9% | | Total costs and expenses | $(4,288) | $(4,148) | $(140) | 3.4% | | Operating income | $551 | $680 | $(129) | -19.0% | | Net income | $261 | $430 | $(169) | -39.3% | | Net income attributable to WMG Corp. | $256 | $394 | $(138) | -35.0% | | Class A – Basic and Diluted EPS | $0.49 | $0.75 | $(0.26) | -34.7% | | Class B – Basic and Diluted EPS | $0.49 | $0.75 | $(0.26) | -34.7% | [Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents condensed consolidated statements of comprehensive income, including net income and other gains/losses Condensed Consolidated Statements of Comprehensive Income Table | Metric | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Change (Millions) | | :--------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------- | | Net (loss) income | $(16) | $141 | $(157) | | Foreign currency adjustment | $118 | $(10) | $128 | | Other comprehensive income (loss), net of tax | $118 | $(10) | $128 | | Total comprehensive income | $102 | $131 | $(29) | | Comprehensive income attributable to WMG Corp. | $102 | $129 | $(27) | Condensed Consolidated Statements of Comprehensive Income Table | Metric | Nine Months Ended June 30, 2025 (Millions) | Nine Months Ended June 30, 2024 (Millions) | Change (Millions) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :---------------- | | Net income | $261 | $430 | $(169) | | Foreign currency adjustment | $73 | $13 | $60 | | Other comprehensive income (loss), net of tax | $73 | $11 | $62 | | Total comprehensive income | $334 | $441 | $(107) | | Comprehensive income attributable to WMG Corp. | $329 | $405 | $(76) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents condensed consolidated statements of cash flows, detailing operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Table | Metric | Nine Months Ended June 30, 2025 (Millions) | Nine Months Ended June 30, 2024 (Millions) | Change (Millions) | | :----------------------------------- | :--------------------------------------- | :--------------------------------------- | :---------------- | | Net cash provided by operating activities | $447 | $450 | $(3) | | Net cash used in investing activities | $(273) | $(201) | $(72) | | Net cash used in financing activities | $(344) | $(280) | $(64) | | Net decrease in cash and equivalents | $(167) | $(34) | $(133) | | Cash and equivalents at end of period | $527 | $607 | $(80) | - **Cash used in investing activities increased by $72 million**, primarily due to higher acquisitions of music publishing rights and music catalogs ($152M vs $123M) and capital expenditures ($111M vs $83M)[17](index=17&type=chunk) - **Cash used in financing activities increased by $64 million**, mainly driven by higher dividends paid ($283M vs $267M) and payment of deferred consideration ($23M vs $0)[17](index=17&type=chunk) [Condensed Consolidated Statements of Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) This section presents condensed consolidated statements of equity, detailing changes in total equity and accumulated deficit Condensed Consolidated Statements of Equity Table | Metric | June 30, 2025 (Millions) | September 30, 2024 (Millions) | Change (Millions) | | :-------------------------------- | :----------------------- | :---------------------------- | :---------------- | | Total Warner Music Group Corp. equity | $589 | $518 | $71 | | Noncontrolling interest | $223 | $157 | $66 | | Total equity | $812 | $675 | $137 | - **Total equity increased by $137 million** from September 30, 2024, to June 30, 2025, primarily due to **net income** and other comprehensive income, partially offset by dividends paid and an increase in accumulated deficit[19](index=19&type=chunk) - **Accumulated deficit increased from $(1,313) million at September 30, 2024, to $(1,340) million at June 30, 2025**, reflecting the **net loss** for the three months ended June 30, 2025, and dividends[19](index=19&type=chunk)[20](index=20&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides details on notes to condensed consolidated financial statements [1. Description of Business](index=12&type=section&id=1.%20Description%20of%20Business) Warner Music Group operates as a major music entertainment company with Recorded Music and Music Publishing - The Company's business is primarily divided into two segments: **Recorded Music** and **Music Publishing**[24](index=24&type=chunk) - **Recorded Music** involves discovering, developing, marketing, promoting, distributing, selling, and licensing music by recording artists[25](index=25&type=chunk) - **Music Publishing** is an intellectual property business focused on generating revenue from the use of musical compositions, sharing revenues with songwriters or other rightsholders[26](index=26&type=chunk) [2. Summary of Significant Accounting Policies](index=12&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This section outlines significant accounting policies, including interim financial statements, consolidation, and new pronouncements - Interim financial statements are prepared in accordance with **U.S. GAAP** for interim financial information and Form 10-Q instructions[27](index=27&type=chunk) - The Company consolidates entities where it has a controlling voting interest or is the primary beneficiary of a **Variable Interest Entity (VIE)**[29](index=29&type=chunk)[30](index=30&type=chunk) - The Company uses the estimated annual effective tax rate method for interim tax provisions and recognizes **Global Intangible Low-Taxed Income (GILTI)** tax in the period it occurs[32](index=32&type=chunk)[33](index=33&type=chunk) - New accounting pronouncements (**ASU 2023-07**, **ASU 2023-09**, **ASU 2024-03**) related to segment reporting, income tax disclosures, and expense disaggregation are being evaluated for their potential impact on consolidated financial statements[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) [3. Earnings per Share](index=14&type=section&id=3.%20Earnings%20per%20Share) The Company calculates earnings per share using the two-class method, reporting a net loss for the three months - The Company uses the **two-class method** for EPS calculation, with no dilutive effect from potential common shares for the periods presented[37](index=37&type=chunk) Earnings per Share Table | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | | Net (loss) income attributable to WMG Corp. | $(16) million | $139 million | | Basic and Diluted EPS (Class A & B) | $(0.03) | $0.27 | Earnings per Share Table | Metric | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------ | :------------------------------ | | Net income attributable to WMG Corp. | $256 million | $394 million | | Basic and Diluted EPS (Class A & B) | $0.49 | $0.75 | [4. Revenue Recognition](index=16&type=section&id=4.%20Revenue%20Recognition) Revenue is disaggregated by type and geographical location, with total revenues increasing by **9% to $1,689 million** Revenue Recognition Table | Revenue Type | 3 Months Ended June 30, 2025 (Millions) | 3 Months Ended June 30, 2024 (Millions) | % Change | | :-------------------------- | :-------------------------------------- | :-------------------------------------- | :------- | | Digital | $929 | $882 | 5% | | Physical | $119 | $120 | -1% | | Artist services & expanded-rights | $195 | $159 | 23% | | Licensing | $111 | $90 | 23% | | Total Recorded Music | $1,354 | $1,251 | 8% | | Total Music Publishing | $336 | $305 | 10% | | Total revenues | $1,689 | $1,554 | 9% | Revenue Recognition Table | Geographical Location | 3 Months Ended June 30, 2025 (Millions) | 3 Months Ended June 30, 2024 (Millions) | % Change | | :-------------------------- | :-------------------------------------- | :-------------------------------------- | :------- | | Total U.S. | $722 | $678 | 6% | | Total International | $968 | $878 | 10% | | Total revenues | $1,689 | $1,554 | 9% | - **Deferred revenue increased by $845 million** during the nine months ended June 30, 2025, related to cash received for fixed fees and minimum guarantees in advance of performance[44](index=44&type=chunk) Remaining Performance Obligations Table | Remaining Performance Obligations | Total (Millions) | | :-------------------------------- | :--------------- | | Rest of FY25 | $422 | | FY26 | $647 | | FY27 | $171 | | Thereafter | $169 | | **Total** | **$1,409** | [5. Comprehensive Income](index=17&type=section&id=5.%20Comprehensive%20Income) Comprehensive income includes net income and other gains/losses, with accumulated other comprehensive loss improving - Components of other comprehensive income primarily include foreign currency translation gains/losses and minimum pension liabilities[47](index=47&type=chunk) Comprehensive Income Table | Metric | September 30, 2024 (Millions) | June 30, 2025 (Millions) | | :-------------------------------- | :---------------------------- | :----------------------- | | Foreign Currency Translation Loss | $(244) | $(171) | | Minimum Pension Liability Adjustment | $(3) | $(3) | | Accumulated Other Comprehensive Loss, net | $(247) | $(174) | - A **$73 million other comprehensive income** was recognized for the nine months ended June 30, 2025, primarily from foreign currency adjustments[48](index=48&type=chunk) [6. Goodwill and Intangible Assets](index=17&type=section&id=6.%20Goodwill%20and%20Intangible%20Assets) Goodwill increased to **$2,064 million**, and net intangible assets increased to **$2,918 million** due to acquisitions Goodwill and Intangible Assets Table | Segment | September 30, 2024 (Millions) | June 30, 2025 (Millions) | Change (Millions) | | :---------------- | :---------------------------- | :----------------------- | :---------------- | | Recorded Music | $1,557 | $1,600 | $43 | | Music Publishing | $464 | $464 | $0 | | Total Goodwill | $2,021 | $2,064 | $43 | Goodwill and Intangible Assets Table | Intangible Asset Type | September 30, 2024 (Millions) | June 30, 2025 (Millions) | Change (Millions) | | :-------------------------------- | :---------------------------- | :----------------------- | :---------------- | | Recorded music catalog | $1,616 | $1,780 | $164 | | Music publishing copyrights | $2,227 | $2,677 | $450 | | Total net intangible assets | $2,511 | $2,918 | $407 | - The acquisition of Tempo Music Holdings, LLC, for **$76 million**, resulted in the recognition of **$351 million** in music publishing copyrights and **$87 million** in recorded music catalogs[53](index=53&type=chunk) - Impairment of trademarks and other intangible assets totaled **$29 million** within the Recorded Music segment[52](index=52&type=chunk) [7. Debt](index=19&type=section&id=7.%20Debt) **Total long-term debt, net, increased to $4,363 million**, primarily due to Tempo Asset-Based Notes, with a lower interest rate Debt Table | Debt Instrument | June 30, 2025 (Millions) | September 30, 2024 (Millions) | | :--------------------------------------- | :----------------------- | :---------------------------- | | Senior Term Loan Facility due 2031 | $1,295 | $1,295 | | Total Acquisition Corp. long-term debt, net | $4,061 | $4,014 | | Tempo Asset-Based Notes due 2050, net | $302 | — | | Total long-term debt, including current portion, net | $4,363 | $4,014 | - The Company acquired **$311 million of Tempo Asset-Based Notes** due 2050, secured only by Tempo's music rights and nonrecourse to the Company[53](index=53&type=chunk)[55](index=55&type=chunk)[61](index=61&type=chunk) - A new Beethoven Credit Facility was established, providing up to **$500 million** in commitment amounts, secured by the borrowers' assets[63](index=63&type=chunk) - The **weighted-average interest rate of the Company's total debt decreased to 4.1%** at June 30, 2025, from **4.3%** at September 30, 2024[77](index=77&type=chunk) [8. Restructuring and Impairments](index=21&type=section&id=8.%20Restructuring%20and%20Impairments) The 2024 Strategic Restructuring Plan is nearing completion, incurring **$7 million** in costs and **$32 million** in impairment losses - The **2024 Strategic Restructuring Plan** is nearing completion, with remaining cash payments expected by the end of fiscal year 2026[78](index=78&type=chunk) - For the nine months ended June 30, 2025, the plan resulted in **$7 million** in severance and contract termination costs and **$32 million** in impairment losses, mainly in the Recorded Music segment[79](index=79&type=chunk)[80](index=80&type=chunk) - A separate pre-tax impairment charge of **$70 million** was recognized for long-lived assets associated with non-core e-tailer operations in the Recorded Music segment[84](index=84&type=chunk) Restructuring Accrual Activity (Nine Months Ended June 30, 2025) Table | Restructuring Accrual Activity (Nine Months Ended June 30, 2025) | Amount (Millions) | | :------------------------------------------------ | :---------------- | | Balance at September 30, 2024 | $104 | | Restructuring charges | $7 | | Cash payments | $(68) | | Balance at June 30, 2025 | $43 | [9. Commitments and Contingencies](index=23&type=section&id=9.%20Commitments%20and%20Contingencies) The Company is involved in routine legal claims, with management believing no material adverse effect on financials - The Company is subject to various claims and legal proceedings in the ordinary course of business[85](index=85&type=chunk) - Management does not believe that the resolution of pending matters will have a **material adverse effect** on financial condition, cash flows, or results of operations[85](index=85&type=chunk) - Litigation is subject to inherent uncertainties and can result in adverse impacts due to defense costs, diversion of resources, and negative publicity[85](index=85&type=chunk) [10. Equity](index=23&type=section&id=10.%20Equity) The Company recognized non-cash stock-based compensation, acquired TenThousand Projects equity, and authorized a share repurchase Equity Table | Metric | 3 Months Ended June 30, 2025 (Millions) | 9 Months Ended June 30, 2025 (Millions) | | :----------------------------------- | :-------------------------------------- | :-------------------------------------- | | Non-cash stock-based compensation expense | $16 | $43 | - The Company issued **869,009** and **2,607,027 shares of Class A Common Stock** for the three and nine months ended June 30, 2025, respectively, under the Senior Management Free Cash Flow Plan[89](index=89&type=chunk) - On August 5, 2025, the Company **acquired the remaining 49% equity interest in TenThousand Projects Holdings LLC for $165 million**, comprising **$40 million cash and $125 million in Class A Common Stock**[90](index=90&type=chunk)[309](index=309&type=chunk)[310](index=310&type=chunk) - A **$100 million share repurchase program was authorized** on November 14, 2024, with approximately **$97 million remaining available** as of June 30, 2025[91](index=91&type=chunk)[268](index=268&type=chunk) Equity Table | Period | Shares Repurchased | Amount (Millions) | | :---------------- | :----------------- | :---------------- | | 3 Months Ended June 30, 2025 | 20,000 | $1 | | 9 Months Ended June 30, 2025 | 80,383 | $3 | [11. Income Taxes](index=24&type=section&id=11.%20Income%20Taxes) Income tax expense was **$5 million** and **$123 million** for the three and nine months, impacted by pre-tax loss and foreign income Income Taxes Table | Metric | 3 Months Ended June 30, 2025 (Millions) | 3 Months Ended June 30, 2024 (Millions) | | :---------------- | :-------------------------------------- | :-------------------------------------- | | Income tax expense | $5 | $30 | Income Taxes Table | Metric | 9 Months Ended June 30, 2025 (Millions) | 9 Months Ended June 30, 2024 (Millions) | | :---------------- | :-------------------------------------- | :-------------------------------------- | | Income tax expense | $123 | $120 | - The **income tax expense for the three months ended June 30, 2025, was lower** than the statutory rate primarily due to a pre-tax loss and a tax benefit from an impairment charge[93](index=93&type=chunk) - The **income tax expense for the nine months ended June 30, 2025, was higher** than the statutory rate due to foreign income taxed at higher rates, non-deductible executive compensation, and the net impact of GILTI and FDII[93](index=93&type=chunk) - The Company estimates an **immaterial impact from OECD BEPS Pillar 2 rules** and is evaluating the potential impact of the One Big Beautiful Bill Act[97](index=97&type=chunk)[98](index=98&type=chunk) [12. Derivative Financial Instruments](index=25&type=section&id=12.%20Derivative%20Financial%20Instruments) The Company uses foreign currency forward exchange contracts to manage risk, reporting realized gains and unrealized losses - The Company uses foreign currency forward exchange contracts to manage foreign currency exchange rate risk[99](index=99&type=chunk) - As of June 30, 2025, **outstanding contracts included the sale of $197 million and purchase of $124 million of foreign currencies**[100](index=100&type=chunk) Derivative Financial Instruments Table | Metric (Nine Months Ended June 30, 2025) | Amount (Millions) | | :--------------------------------------- | :---------------- | | Realized pre-tax gains | $7 | | Unrealized pre-tax losses | $(5) | [13. Segment Information](index=25&type=section&id=13.%20Segment%20Information) The Company's business is segmented into Recorded Music and Music Publishing, with performance evaluated by **Adjusted OIBDA** - The Company's reportable segments are **Recorded Music** and **Music Publishing**[103](index=103&type=chunk) - **Adjusted OIBDA** is the primary financial measure for evaluating segment performance, excluding non-cash depreciation, amortization, stock-based compensation, and certain non-comparable items[103](index=103&type=chunk) Segment (3 Months Ended June 30) Table | Segment (3 Months Ended June 30) | 2025 (Millions) | 2024 (Millions) | % Change | | :-------------------------------- | :-------------- | :-------------- | :------- | | Recorded Music Revenues | $1,354 | $1,251 | 8% | | Recorded Music Adjusted OIBDA | $321 | $281 | 14% | | Music Publishing Revenues | $336 | $305 | 10% | | Music Publishing Adjusted OIBDA | $96 | $79 | 22% | Segment (9 Months Ended June 30) Table | Segment (9 Months Ended June 30) | 2025 (Millions) | 2024 (Millions) | % Change | | :-------------------------------- | :-------------- | :-------------- | :------- | | Recorded Music Revenues | $3,874 | $3,885 | -0% | | Recorded Music Adjusted OIBDA | $914 | $965 | -5% | | Music Publishing Revenues | $969 | $915 | 6% | | Music Publishing Adjusted OIBDA | $264 | $247 | 7% | [14. Additional Financial Information](index=27&type=section&id=14.%20Additional%20Financial%20Information) This section details cash flow disclosures, including interest and tax payments, investment gains, and dividend declarations Cash Flow Item Table | Cash Flow Item | 3 Months Ended June 30, 2025 (Millions) | 3 Months Ended June 30, 2024 (Millions) | | :-------------------------------- | :-------------------------------------- | :-------------------------------------- | | Interest payments | $43 | $35 | | Income and withholding taxes, net | $50 | $33 | Cash Flow Item Table | Cash Flow Item | 9 Months Ended June 30, 2025 (Millions) | 9 Months Ended June 30, 2024 (Millions) | | :-------------------------------- | :-------------------------------------- | :-------------------------------------- | | Interest payments | $114 | $125 | | Income and withholding taxes, net | $151 | $105 | - The Company recognized a **pre-tax realized net gain of $29 million** from the sale of an investment for the nine months ended June 30, 2025[110](index=110&type=chunk) - Dividends of **$0.18 per share** were paid on June 3, 2025, totaling **$94 million** for the three months and **$283 million** for the nine months ended June 30, 2025[113](index=113&type=chunk) - A **cash dividend of $0.19 per share** was declared on August 7, 2025, payable on September 3, 2025[114](index=114&type=chunk) [15. Fair Value Measurements](index=28&type=section&id=15.%20Fair%20Value%20Measurements) The Company measures financial instruments at fair value, including foreign currency contracts and equity investments Fair Value Measurements Table | Financial Instrument | June 30, 2025 (Millions) | September 30, 2024 (Millions) | | :--------------------------------------- | :----------------------- | :---------------------------- | | Foreign currency forward exchange contracts (net) | $(5) | — | | Equity investments with readily determinable fair value | $9 | $9 | | Fair value of total debt | $4,217 | $3,836 | - The fair value of foreign currency forward exchange contracts is based on dealer quotes of market forward rates (Level 2 measurement)[116](index=116&type=chunk) - Equity investments with readily determinable fair value are measured based on quoted prices in active markets (Level 1 measurement)[117](index=117&type=chunk) - The fair value of the Company's debt instruments is determined using quoted market prices from less active markets or for instruments with identical terms and maturities (Level 2 measurement)[120](index=120&type=chunk) [16. Subsequent Events](index=29&type=section&id=16.%20Subsequent%20Events) A new **2025 Restructuring Plan** aims for **$300 million** in annualized cost savings by fiscal year 2027 - The **2025 Restructuring Plan**, announced July 1, 2025, aims for approximately **$300 million in annualized pre-tax cost savings** by the end of fiscal year 2027[122](index=122&type=chunk) - The majority of the cost savings from the **2025 Restructuring Plan** are expected to be accretive to **Adjusted OIBDA**[122](index=122&type=chunk) - No charges related to the **2025 Restructuring Plan** were recognized in the current reporting period[122](index=122&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the Company's financial condition and results of operations, including segment performance and liquidity [SAFE HARBOR STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995](index=30&type=section&id=SAFE%20HARBOR%20STATEMENT%20UNDER%20PRIVATE%20SECURITIES%20LITIGATION%20REFORM%20ACT%20OF%201995) This statement outlines forward-looking statements and associated risks, disclaiming any obligation to update them - The report contains forward-looking statements subject to known and unknown risks and uncertainties beyond the Company's control[125](index=125&type=chunk) - Actual performance and outcomes may differ materially from expectations due to factors such as market competition, artist retention, streaming growth, digital service provider dependence, climate change, and intellectual property risks[125](index=125&type=chunk) - The Company does not undertake to update or revise any forward-looking statements unless required by law[126](index=126&type=chunk) [INTRODUCTION](index=32&type=section&id=INTRODUCTION) This section introduces the Company's business, key segments, and primary financial performance metrics - **Warner Music Group Corp.** is a major music entertainment company operating primarily through its subsidiaries, WMG Holdings Corp. and WMG Acquisition Corp[130](index=130&type=chunk)[131](index=131&type=chunk) - **Adjusted OIBDA** is used as a primary financial measure to evaluate operating performance, excluding non-cash depreciation, amortization, stock-based compensation, and certain non-comparable items[132](index=132&type=chunk) - Constant-currency presentation is used to compare revenue and **Adjusted OIBDA** between periods, adjusting for foreign exchange rate fluctuations[133](index=133&type=chunk) [BUSINESS OVERVIEW](index=33&type=section&id=BUSINESS%20OVERVIEW) This section provides an overview of the Company's Recorded Music and Music Publishing segments and revenue diversification - The Company operates through two fundamental segments: **Recorded Music** and **Music Publishing**[136](index=136&type=chunk) - **Recorded Music** involves artist discovery, development, marketing, distribution, sale, and licensing, with major labels like Atlantic Records and Warner Records, and a next-generation services division, WMX[137](index=137&type=chunk)[138](index=138&type=chunk)[140](index=140&type=chunk) - **Music Publishing**, primarily through Warner Chappell Music, focuses on generating revenue from musical compositions, owning or controlling rights to over **1.5 million** compositions by **180,000+** songwriters[144](index=144&type=chunk)[145](index=145&type=chunk) - Revenue diversification includes expanded-rights deals with artists for touring, merchandising, and sponsorships, and digital distribution through streaming services and online platforms[142](index=142&type=chunk)[143](index=143&type=chunk) [Recent Events and Factors Affecting Results of Operations and Comparability](index=36&type=section&id=Recent%20Events%20and%20Factors%20Affecting%20Results%20of%20Operations%20and%20Comparability) This section details recent events and factors impacting the Company's results of operations and comparability - The **2024 Strategic Restructuring Plan** is substantially complete, aiming to free up funds for music investment and accelerate growth through non-core operation disposal, overhead management, and operational efficiencies[148](index=148&type=chunk)[149](index=149&type=chunk) - For the nine months ended June 30, 2025, the **2024 plan incurred $7 million** in severance and contract termination costs and **$32 million** in impairment losses, primarily in the Recorded Music segment[150](index=150&type=chunk) - A pre-tax impairment charge of **$70 million** was recognized for long-lived assets related to non-core e-tailer operations in the Recorded Music segment for the three and nine months ended June 30, 2025[151](index=151&type=chunk) - The Company terminated its distribution agreement with BMG in September 2023, leading to a phased in-sourcing of distribution and an expected **$14 million** and **$64 million less Recorded Music revenue** for the three and nine months ended June 30, 2025, respectively[152](index=152&type=chunk)[158](index=158&type=chunk)[205](index=205&type=chunk) [Three Months Ended June 30, 2025 Compared with Three Months Ended June 30, 2024](index=37&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20Compared%20with%20Three%20Months%20Ended%20June%2030%2C%202024) For the three months, revenues increased, but operating income and net income decreased due to charges and foreign currency losses [Consolidated Results](index=37&type=section&id=Consolidated%20Results%20%283%20Months%29) Consolidated revenues increased, but operating income and net income decreased due to impairment and foreign currency losses Consolidated Revenue by Type (3 Months Ended June 30) | Revenue Type | 2025 (Millions) | 2024 (Millions) | $ Change | % Change | | :-------------------------- | :-------------- | :-------------- | :------- | :------- | | Digital | $929 | $882 | $47 | 5% | | Physical | $119 | $120 | $(1) | -1% | | Artist services & expanded-rights | $195 | $159 | $36 | 23% | | Licensing | $111 | $90 | $21 | 23% | | Total Recorded Music | $1,354 | $1,251 | 8% | | Total Music Publishing | $336 | $305 | 10% | | Total revenues | $1,689 | $1,554 | 9% | Consolidated Financial Performance (3 Months Ended June 30) | Metric | 2025 (Millions) | 2024 (Millions) | $ Change | % Change | | :--------------------------------------- | :-------------- | :-------------- | :------- | :------- | | Operating income | $169 | $207 | $(38) | -18% | | Interest expense, net | $43 | $40 | $3 | 8% | | Other (expense) income | $(137) | $4 | $(141) | -3525% | | Income tax expense | $5 | $30 | $(25) | -83% | | Net (loss) income attributable to WMG Corp. | $(16) | $139 | $(155) | -112% | | Adjusted OIBDA | $373 | $316 | $57 | 18% | - **Restructuring and impairment charges increased significantly to $69 million** (from **$1 million**), including a **$70 million** impairment for non-core e-tailer operations[177](index=177&type=chunk) - **Other expense increased to $137 million**, primarily due to **$70 million** in foreign currency losses on Euro-denominated debt and **$63 million** in currency exchange losses on intercompany loans[182](index=182&type=chunk) [Business Segment Results](index=43&type=section&id=Business%20Segment%20Results%20%283%20Months%29) Recorded Music and Music Publishing segments showed revenue growth, but Recorded Music operating income declined due to charges Segment Performance (3 Months Ended June 30) | Segment | Metric | 2025 (Millions) | 2024 (Millions) | $ Change | % Change | | :---------------- | :---------------- | :-------------- | :-------------- | :------- | :------- | | Recorded Music | Revenues | $1,354 | $1,251 | $103 | 8% | | | Operating income | $201 | $230 | $(29) | -13% | | | Adjusted OIBDA | $321 | $281 | $40 | 14% | | Music Publishing | Revenues | $336 | $305 | $31 | 10% | | | Operating income | $60 | $53 | $7 | 13% | | | Adjusted OIBDA | $96 | $79 | $17 | 22% | - **Recorded Music revenue growth** was driven by digital (up **$47M, 5%**), artist services and expanded-rights (up **$36M, 23%**), and licensing (up **$21M, 23%**), partially offset by a slight decrease in physical revenue[158](index=158&type=chunk) - **Music Publishing revenue growth** was driven by digital (up **$10M, 5%**), performance (up **$6M, 12%**), synchronization (up **$12M, 29%**), and mechanical (up **$3M, 23%**) revenues[160](index=160&type=chunk) - **Recorded Music operating income decreased** due to a **$67 million** increase in restructuring and impairment charges, including a **$70 million** impairment for non-core e-tailer operations[191](index=191&type=chunk) [Nine Months Ended June 30, 2025 Compared with Nine Months Ended June 30, 2024](index=47&type=section&id=Nine%20Months%20Ended%20June%2030%2C%202025%20Compared%20with%20Nine%20Months%20Ended%20June%2030%2C%202024) For the nine months, revenues marginally increased, but operating and net income decreased due to various charges and lower licensing [Consolidated Results](index=47&type=section&id=Consolidated%20Results%20%289%20Months%29) Consolidated revenues marginally increased, but operating and net income decreased due to various charges and lower licensing Consolidated Revenue by Type (9 Months Ended June 30) | Revenue Type | 2025 (Millions) | 2024 (Millions) | $ Change | % Change | | :-------------------------- | :-------------- | :-------------- | :------- | :------- | | Digital | $2,643 | $2,638 | $5 | 0% | | Physical | $397 | $385 | $12 | 3% | | Artist services & expanded-rights | $508 | $489 | $19 | 4% | | Licensing | $326 | $373 | $(47) | -13% | | Total Recorded Music | $3,874 | $3,885 | $(11) | 0% | | Total Music Publishing | $969 | $915 | $54 | 6% | | Total revenues | $4,839 | $4,796 | $43 | 1% | Consolidated Financial Performance (9 Months Ended June 30) | Metric | 2025 (Millions) | 2024 (Millions) | $ Change | % Change | | :--------------------------------------- | :-------------- | :-------------- | :------- | :------- | | Operating income | $551 | $680 | $(129) | -19% | | Interest expense, net | $119 | $121 | $(2) | -2% | | Other expense | $48 | $9 | $39 | 433% | | Income tax expense | $123 | $120 | $3 | 3% | | Net income attributable to WMG Corp. | $256 | $394 | $(138) | -35% | | Adjusted OIBDA | $1,039 | $1,079 | $(40) | -4% | - **Recorded Music licensing revenue decreased by $47 million**, primarily due to a **$75 million** Licensing Extension in the prior year[209](index=209&type=chunk) - **Restructuring and impairment charges increased by $13 million to $109 million**, including a **$70 million** impairment for non-core e-tailer operations[229](index=229&type=chunk) [Business Segment Results](index=54&type=section&id=Business%20Segment%20Results%20%289%20Months%29) Recorded Music revenues slightly decreased with lower operating income, while Music Publishing revenues and OIBDA grew Segment Performance (9 Months Ended June 30) | Segment | Metric | 2025 (Millions) | 2024 (Millions) | $ Change | % Change | | :---------------- | :---------------- | :-------------- | :-------------- | :------- | :------- | | Recorded Music | Revenues | $3,874 | $3,885 | $(11) | 0% | | | Operating income | $642 | $739 | $(97) | -13% | | | Adjusted OIBDA | $914 | $965 | $(51) | -5% | | Music Publishing | Revenues | $969 | $915 | $54 | 6% | | | Operating income | $167 | $185 | $(18) | -10% | | | Adjusted OIBDA | $264 | $247 | $17 | 7% | - **Recorded Music revenue decrease** was driven by lower licensing revenue, partially offset by increases in artist services and physical revenues[240](index=240&type=chunk) - **Music Publishing revenue increase** was driven by growth across digital (up **$22M, 4%**), performance (up **$12M, 8%**), synchronization (up **$13M, 10%**), mechanical (up **$3M, 7%**), and other publishing revenues[211](index=211&type=chunk) - **Recorded Music operating income decreased** due to a **$17 million** net gain on divestitures in the prior year and higher restructuring and non-cash impairment charges (**$110 million** vs **$89 million**)[244](index=244&type=chunk) [FINANCIAL CONDITION AND LIQUIDITY](index=59&type=section&id=FINANCIAL%20CONDITION%20AND%20LIQUIDITY) The Company's net debt increased to **$3.836 billion**, with stable operating cash flow but increased investing and financing uses [Financial Condition at June 30, 2025](index=59&type=section&id=Financial%20Condition%20at%20June%2030%2C%202025) The Company reported **total debt of $4.363 billion** and **cash of $527 million**, resulting in a **net debt of $3.836 billion** Financial Condition at June 30, 2025 Table | Metric | June 30, 2025 (Millions) | September 30, 2024 (Millions) | | :--------------------------------------- | :----------------------- | :---------------------------- | | Total debt (net of premiums, discounts, DFCs) | $4,363 | $4,014 | | Cash and equivalents | $527 | $694 | | Net debt | $3,836 | $3,320 | | Total Warner Music Group Corp. equity | $589 | $518 | [Cash Flows](index=59&type=section&id=Cash%20Flows) Cash provided by operating activities was **$447 million**, with increased cash used in investing and financing activities Cash Flows Table | Cash Flow Activity (Nine Months Ended June 30) | 2025 (Millions) | 2024 (Millions) | | :--------------------------------------------- | :-------------- | :-------------- | | Operating activities | $447 | $450 | | Investing activities | $(273) | $(201) | | Financing activities | $(344) | $(280) | - The **$72 million increase in cash used in investing activities** was due to **$152 million** for music-related assets and **$111 million** for capital expenditures[263](index=263&type=chunk) - The **$64 million increase in cash used in financing activities** was primarily from **$283 million** in dividends paid and **$23 million** in deferred consideration[264](index=264&type=chunk) [Liquidity](index=59&type=section&id=Liquidity) The Company's primary liquidity sources are cash flows from operations, available cash, and the Revolving Credit Facility - Primary sources of liquidity include **cash flows from operations**, **available cash and equivalents**, and funds from the **Revolving Credit Facility**[265](index=265&type=chunk) - Management believes current liquidity sources are sufficient to support existing operations for the next twelve months[266](index=266&type=chunk) - Cash deposits in excess of FDIC or other deposit insurance limits pose a risk to liquidity and financial performance in the event of bank failure[265](index=265&type=chunk) [Debt Capital Structure](index=60&type=section&id=Debt%20Capital%20Structure) The Company actively manages its debt capital structure, improving credit ratings and reducing weighted-average interest rates - The Company has focused on extending debt maturity dates and reducing interest expense[267](index=267&type=chunk) - **Credit ratings have improved**: S&P corporate credit rating to **BBB- (stable)** in August 2024, and Moody's corporate family rating to **Ba1 (positive)** in March 2025[267](index=267&type=chunk) - The **weighted-average interest rate on outstanding indebtedness decreased to 4.1%** at June 30, 2025, from **10.5%** in 2011[267](index=267&type=chunk) - The **nearest-term debt maturity date is in 2028**[267](index=267&type=chunk) [Repurchase Program](index=60&type=section&id=Repurchase%20Program) A **$100 million share repurchase program** was authorized to offset dilution, with **$97 million remaining available** - A **$100 million share repurchase program was authorized** on November 14, 2024, to offset dilution[268](index=268&type=chunk) - As of June 30, 2025, **$97 million of the authorization remained available**[268](index=268&type=chunk) Repurchase Program Table | Period | Shares Repurchased | Amount (Millions) | | :---------------- | :----------------- | :---------------- | | 3 Months Ended June 30, 2025 | 20,000 | $1 | | 9 Months Ended June 30, 2025 | 80,383 | $3 | [Existing Debt as of June 30, 2025](index=60&type=section&id=Existing%20Debt%20as%20of%20June%2030%2C%202025) The Company's **total long-term debt, net, was $4,363 million**, including Acquisition Corp. and Tempo Asset-Based Notes Existing Debt as of June 30, 2025 Table | Debt Instrument | Amount (Millions) | | :--------------------------------------- | :-------------- | | Senior Term Loan Facility due 2031 | $1,295 | | 2.750% Senior Secured Notes due 2028 | $381 | | 3.750% Senior Secured Notes due 2029 | $540 | | 3.875% Senior Secured Notes due 2030 | $535 | | 2.250% Senior Secured Notes due 2031 | $522 | | 3.000% Senior Secured Notes due 2031 | $800 | | Mortgage Term Loan due 2033 | $17 | | Total Acquisition Corp. long-term debt, net | $4,061 | | Tempo Asset-Based Notes due 2050, net | $302 | | Total long-term debt, including current portion, net | $4,363 | - The **Revolving Credit Facility has $350 million in commitments** with no outstanding loans as of June 30, 2025[270](index=270&type=chunk) - **Tempo Asset-Based Notes are secured only by Tempo's music rights and are nonrecourse** to the Company and its other subsidiaries[271](index=271&type=chunk) [Dividends](index=61&type=section&id=Dividends) The Company intends to pay quarterly cash dividends, subject to board discretion and potential covenant restrictions - The Company intends to pay quarterly cash dividends, subject to board discretion and financial factors[274](index=274&type=chunk) - Dividend payments may be restricted if Acquisition Corp.'s **Total Indebtedness to EBITDA Ratio exceeds 3.50:1.00** and term loans do not achieve an investment grade rating[273](index=273&type=chunk) Dividends Table | Dividend Declaration | Per Share Amount | | :------------------- | :--------------- | | May 16, 2025 | $0.18 | | August 7, 2025 | $0.19 | [Covenant Compliance](index=61&type=section&id=Covenant%20Compliance) The Company was in compliance with all debt covenants, using **Adjusted EBITDA** for calculations with specific adjustments - The Company **was in compliance** with all debt covenants as of June 30, 2025[277](index=277&type=chunk) - The **Revolving Credit Facility's springing leverage ratio is currently suspended** but would be reinstated if aggregate borrowings exceed **$140 million**[279](index=279&type=chunk)[284](index=284&type=chunk) - **Adjusted EBITDA**, a non-GAAP measure, is used for covenant calculations and includes adjustments for restructuring costs, non-cash charges, foreign exchange, business optimization, and pro forma impacts of cost savings[279](index=279&type=chunk)[282](index=282&type=chunk) Covenant Compliance Table | Metric (Twelve Months Ended June 30, 2025) | Amount (Millions) | | :----------------------------------------- | :---------------- | | Net Income (loss) | $309 | | Adjusted EBITDA | $1,719 | | Senior Secured Indebtedness | $3,551 | | Leverage Ratio | 2.07x | [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=65&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company is exposed to market risks from foreign currency and interest rates, managed through derivatives and debt structure - The Company is exposed to market risks from foreign currency exchange rates and interest rates[288](index=288&type=chunk) - Foreign currency risk is managed using forward exchange contracts; at June 30, 2025, contracts for **$197 million** in sales and **$124 million** in purchases were outstanding[289](index=289&type=chunk) - A hypothetical **10%** depreciation of the U.S. dollar would decrease the fair value of foreign exchange forward contracts by **$7 million**[290](index=290&type=chunk) - At June 30, 2025, **70%** of the Company's **$4.401 billion** principal debt was at a fixed rate[291](index=291&type=chunk) - A **25 basis point** increase/decrease in interest rates would decrease/increase the fair value of fixed-rate debt by approximately **$31 million/$32 million**[292](index=292&type=chunk) - **Inflation has not had a material effect** on the Company's business, financial condition, or results of operations to date[293](index=293&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=66&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were effective, and ERP implementation is updating internal controls over financial reporting - The Company's **disclosure controls and procedures were effective as of June 30, 2025**, ensuring timely and accurate information disclosure[300](index=300&type=chunk)[301](index=301&type=chunk) - The Company is undergoing a **multi-year implementation to upgrade its information technology and finance infrastructure, including a new ERP system**[298](index=298&type=chunk) - The **core financials component of the new technology platform has been launched** for the Music Publishing segment and various Recorded Music territories[298](index=298&type=chunk) - **Internal controls over financial reporting have been updated** in connection with the ERP implementation, with further changes anticipated as the rollout continues[299](index=299&type=chunk) [PART II. OTHER INFORMATION](index=69&type=section&id=Part%20II.%20Other%20Information) This section covers legal proceedings, risk factors, equity sales, and other miscellaneous information [ITEM 1. LEGAL PROCEEDINGS](index=69&type=section&id=Item%201.%20Legal%20Proceedings) The Company is involved in routine legal claims, with management believing no material adverse effect on financials - The Company is involved in claims and legal proceedings arising in the ordinary course of business[304](index=304&type=chunk) - Management does not believe that the resolution of pending matters will have a **material adverse effect** on financial condition, cash flows, or results of operations[304](index=304&type=chunk) - Litigation is subject to inherent uncertainties and can result in adverse impacts due to defense costs, diversion of resources, and negative publicity[304](index=304&type=chunk) [ITEM 1A. RISK FACTORS](index=69&type=section&id=Item%201A.%20Risk%20Factors) **No material changes** to the risk factors previously discussed in the Annual Report on Form 10-K - **No material changes to the risk factors discussed in the Annual Report on Form 10-K** for the fiscal year ended September 30, 2024[305](index=305&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) The Company's **$100 million share repurchase program** had **$97 million remaining** as of June 30, 2025 Unregistered Sales of Equity Securities and Use of Proceeds Table | Period | Shares Repurchased | Average Price Paid per Share | Dollar Value Remaining (Millions) | | :--------- | :----------------- | :--------------------------- | :-------------------------------- | | April 2025 | 20,000 | $29.50 | $97 | | May 2025 | — | — | $97 | | June 2025 | — | — | $97 | - The **$100 million share repurchase program**, authorized on November 14, 2024, had approximately **$97 million remaining available** as of June 30, 2025[306](index=306&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=69&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the Company for the reporting period - **Not applicable**[307](index=307&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=69&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company for the reporting period - **Not applicable**[308](index=308&type=chunk) [ITEM 5. OTHER INFORMATION](index=69&type=section&id=Item%205.%20Other%20Information) Warner Music Inc. **acquired the remaining 49% equity interest in TenThousand Projects Holdings LLC for $165 million** post-period - On August 5, 2025, **Warner Music Inc. acquired the remaining 49% equity interest in TenThousand Projects Holdings LLC**[309](index=309&type=chunk) - The **aggregate consideration for the acquisition was $165 million**, comprising **$40 million cash and $125 million in Class A Common Stock**[310](index=310&type=chunk) - The **Class A Common Stock issued is subject to lock-up periods**, with the first installment's shares locked until March 1, 2026, and the second installment's shares locked until the second anniversary of the closing date[311](index=311&type=chunk) [ITEM 6. EXHIBITS](index=71&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including various agreements and certifications - **Exhibits include various agreements (separation, employment, JV, credit), certifications (CEO, CFO), and XBRL documents**[314](index=314&type=chunk) - Agreements and documents are not intended to provide factual information beyond their terms; representations and warranties are specific to the context of the agreement[313](index=313&type=chunk) [SIGNATURES](index=72&type=section&id=Signatures) The report was duly signed on August 7, 2025, by the Chief Executive Officer and Chief Financial Officer - The report was signed on August 7, 2025[318](index=318&type=chunk) - Signatories include Robert Kyncl, Chief Executive Officer, and Armin Zerza, Chief Financial Officer and Principal Accounting Officer[318](index=318&type=chunk) ```

Exhibit 99.1 Cabaletta Bio Reports Second Quarter 2025 Financial Results and Provides Business Update – Registrational cohort enrollment in RESET-Myositis™ trial on track to start in 2H25 with anticipated 2027 BLA submission for rese-cel in myositis – – Five disease-specific cohorts fully enrolled in the RESET™ clinical development program from over 70 clinical sites as of July 31, 2025, with expansion phase enrollment continuing – Recent Operational Highlights and Upcoming Anticipated Milestones Rese-cel: ...

"Submitting the NDA on schedule is an important milestone that reflects the hard work and dedication of our team and partners," said Dr. Cindy Jacobs, President and Chief Medical Officer of Achieve Life Sciences. "Cytisinicline is supported by a comprehensive clinical data package, and we're committed to working closely with the FDA to advance this important potential treatment option for adults seeking to overcome nicotine dependence." • Submitted a New Drug Application (NDA) to the U.S. Food and Drug Admi ...

Executive Summary & Financial Highlights Warner Music Group reported strong Q3 FY2025 results driven by revenue growth in recorded music and music publishing, despite a net loss, with strategic investments and efficiency initiatives supporting adjusted OIBDA expansion [Q3 FY2025 Performance Overview](index=1&type=section&id=Q3%20FY2025%20Performance%20Overview) Warner Music Group's CEO and CFO highlighted strong Q3 FY2025 performance, driven by hit songs, market share growth, and strategic investments in artists, songwriters, and technology, while focusing on efficiency and profit expansion - CEO Robert Kyncl emphasized strong revenue growth and market share gains, attributing success to strategic focus on artists, songwriters, and global impact[3](index=3&type=chunk) - CFO Armin Zerza noted robust performance reflects commitment to investing in music, enhancing efficiency, and accelerating core business growth while expanding margins[3](index=3&type=chunk) [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) The company reported accelerated revenue growth in recorded music and music publishing, supporting double-digit adjusted OIBDA growth and margin expansion, despite a net loss this quarter - Revenue re-accelerated in recorded music and music publishing, driving **double-digit adjusted OIBDA growth** and margin expansion[4](index=4&type=chunk) - Recorded music streaming performance benefited from **strong US market share growth** and chart success across geographies and genres[4](index=4&type=chunk) - Recent restructuring and catalog acquisition joint venture are expected to provide **additional capital for reinvestment**[4](index=4&type=chunk) Q3 FY2025 Key Financial Highlights | Metric | Q3 2025 ($M) | Q3 2024 ($M) | Percentage Change | | :--------------------------------- | :------ | :------ | :------- | | Total Revenue | $1,689 | $1,554 | 9% | | Net (Loss) Income | $(16) | $141 | —% (Loss) | | Operating Income | $169 | $207 | -18% | | Adjusted OIBDA | $373 | $316 | 18% | | Cash Flow from Operations | $46 | $188 | -76% | Consolidated Financial Performance Warner Music Group's Q3 FY2025 results show overall revenue growth driven by segment performance, but operating income and net income were impacted by increased expenses and foreign exchange effects [Total WMG Summary Results](index=2&type=section&id=Total%20WMG%20Summary%20Results) Warner Music Group's total revenue grew **9% to $1.689 billion** in Q3 FY2025, driven by recorded music and music publishing, though operating income declined **18%** and a **$16 million net loss** was recorded due to restructuring and foreign exchange impacts, while adjusted OIBDA increased **18%** reflecting operational efficiencies Total WMG Summary Results (Three Months Ended June 30) | Metric | June 30, 2025 ($M) | June 30, 2024 ($M) | Percentage Change | | :--------------------------------- | :------------ | :------------ | :------- | | Revenue | $1,689 | $1,554 | 9 % | | Recorded Music Revenue | $1,354 | $1,251 | 8 % | | Music Publishing Revenue | $336 | $305 | 10 % | | Operating Income | $169 | $207 | -18 % | | Adjusted OIBDA | $373 | $316 | 18 % | | Net (Loss) Income | $(16) | $141 | — % | | Cash Flow from Operations | $46 | $188 | -76 % | | Free Cash Flow | $7 | $160 | -96 % | - Total revenue increased **8.7%** (**7.0% at constant currency**), with digital revenue growing **5.3%** (**4.1% at constant currency**) primarily driven by **4.0% streaming revenue growth** (**2.9% at constant currency**); excluding specific items, total revenue grew **10.2%** (**8.5% at constant currency**)[6](index=6&type=chunk) - Operating income decreased **18.4% to $169 million**, primarily due to a **$68 million increase in restructuring and impairment charges**, **$12 million higher amortization expense**, and increased non-cash equity-based compensation and executive transition costs[7](index=7&type=chunk) - Adjusted OIBDA increased **18.0% to $373 million**, with adjusted OIBDA margin expanding **1.8 percentage points to 22.1%**, driven by revenue mix, acquisition impact, and cost savings from the 2024 strategic restructuring plan, partially offset by reinvestment in technology[8](index=8&type=chunk) [Net Loss and EPS](index=2&type=section&id=Net%20Loss%20and%20EPS) The company reported a **$16 million net loss** in Q3 FY2025, a significant decline from **$141 million net income** in the prior year, primarily due to negative foreign exchange impacts on Euro-denominated debt and hedging losses, partially offset by reduced income tax expense Net (Loss) Income and EPS (Three Months Ended June 30) | Metric | June 30, 2025 ($M) | June 30, 2024 ($M) | Percentage Change | | :--------------------------------- | :------------ | :------------ | :------- | | Net (Loss) Income | $(16) | $141 | — % | | Basic and Diluted EPS for Class A and B Common Stock | $(0.03) | $0.27 | — % | - Net loss primarily resulted from a **$70 million loss** on foreign exchange rates for Euro-denominated debt (compared to a **$7 million gain** in the prior year) and **$8 million in realized and unrealized losses** from hedging activities (compared to a **$1 million gain** in the prior year)[9](index=9&type=chunk) - Net loss was partially offset by a **$25 million decrease in income tax expense**, mainly due to a pre-tax loss this quarter[9](index=9&type=chunk) [Liquidity and Cash Flow](index=3&type=section&id=Liquidity%20and%20Cash%20Flow) Warner Music Group's cash flow from operations significantly decreased **76% to $46 million**, and free cash flow dropped **96% to $7 million**, primarily due to increased A&R spending, working capital changes, and higher capital expenditures for technology investments, with a cash balance of **$527 million** and total debt of **$4.363 billion** as of June 30, 2025 Cash and Debt Position (As of June 30, 2025) | Metric | Amount ($M) | | :--------------------------------- | :---------------- | | Cash Balance | $527 | | Total Debt | $4,363 | | Net Debt | $3,836 | Cash Flow Summary (Three Months Ended June 30) | Metric | June 30, 2025 ($M) | June 30, 2024 ($M) | Percentage Change | | :--------------------------------- | :------------ | :------------ | :------- | | Cash Flow from Operations | $46 | $188 | -76 % | | Free Cash Flow | $7 | $160 | -96 % | | Capital Expenditures | $39 | $28 | 39 % | - Cash flow from operations decreased primarily due to **increased A&R spending** and other changes in working capital[12](index=12&type=chunk) - Free cash flow decline also attributed to a **39% increase in capital expenditures to $39 million**, mainly for technology investments[12](index=12&type=chunk) Segment Performance The company's segment performance highlights revenue growth in both recorded music and music publishing, with adjusted OIBDA expansion, despite varying impacts on operating income due to restructuring and amortization [Recorded Music](index=4&type=section&id=Recorded%20Music) Recorded Music revenue grew **8% to $1.354 billion**, driven by digital, artist services, expanded rights, and licensing income, despite a slight decline in physical revenue, while adjusted OIBDA increased **14% to $321 million** with margin expansion due to cost savings and revenue mix, though operating income decreased due to higher restructuring and impairment charges [Recorded Music Revenue](index=4&type=section&id=Recorded%20Music%20Revenue) Recorded Music revenue increased, primarily driven by digital, artist services, and licensing, with strong streaming performance and chart success, partially offset by a slight decline in physical revenue Recorded Music Revenue (Three Months Ended June 30) | Revenue Type | June 30, 2025 ($M) | June 30, 2024 ($M) | Percentage Change | | :--------------------------------- | :------------ | :------------ | :------- | | Total Recorded Music Revenue | $1,354 | $1,251 | 8 % | | Digital | $929 | $882 | 5 % | | Physical | $119 | $120 | -0.8 % | | Artist Services and Expanded Rights | $195 | $159 | 22.6 % | | Licensing | $111 | $90 | 23.3 % | - Digital revenue grew **5.3%** (**4.1% at constant currency**), with streaming revenue up **3.7%** (**2.6% at constant currency**), and subscription revenue increasing **5.3%** (**4.2% at constant currency**) due to positive market share trends and chart performance[15](index=15&type=chunk) - Licensing revenue increased **23.3%** (**19.4% at constant currency**) driven by UK and China licensing deals and the timing of other copyright infringement settlements[15](index=15&type=chunk) - Artist services and expanded rights revenue grew **22.6%** (**19.6% at constant currency**) primarily due to increased concert promotion revenue in France and Spain[15](index=15&type=chunk) - Physical revenue decreased **0.8%** (**4.0% at constant currency**), with growth from strong releases in Korea and Japan offset by a **$10 million impact** from the BMG termination agreement; excluding this, physical revenue grew **8.2%** (**4.4% at constant currency**)[15](index=15&type=chunk) - Top-selling artists this quarter included **BAEKHYUN, ROSÉ, Bruno Mars, Grateful Dead, and Teddy Swims**[15](index=15&type=chunk) [Recorded Music Operating Income & Adjusted OIBDA](index=4&type=section&id=Recorded%20Music%20Operating%20Income%20%26%20Adjusted%20OIBDA) Recorded Music operating income declined due to increased restructuring and amortization, while adjusted OIBDA grew with margin expansion, driven by strategic cost savings and revenue mix Recorded Music Operating Income and Adjusted OIBDA (Three Months Ended June 30) | Metric | June 30, 2025 ($M) | June 30, 2024 ($M) | Percentage Change | | :--------------------------------- | :------------ | :------------ | :------- | | Operating Income | $201 | $230 | -13 % | | Operating Margin | 14.8 % | 18.4 % | -3.6 ppts | | Adjusted OIBDA | $321 | $281 | 14 % | | Adjusted OIBDA Margin | 23.7 % | 22.5 % | +1.2 ppts | - Operating income decreased **12.6%**, primarily due to a **$67 million increase in restructuring and impairment charges** (including long-lived asset impairment related to non-core e-commerce business) and a **$3 million increase in amortization expense** from music-related asset acquisitions[16](index=16&type=chunk)[17](index=17&type=chunk) - Adjusted OIBDA increased **14.2%** (**12.2% at constant currency**), with adjusted OIBDA margin improving **1.2 percentage points**, driven by savings from the 2024 strategic restructuring plan, partially offset by reinvestment in the business and revenue mix[18](index=18&type=chunk) [Music Publishing](index=6&type=section&id=Music%20Publishing) Music Publishing revenue grew **10% to $336 million**, driven by digital, performance, synchronization, and mechanical revenue streams, with operating income increasing **13% to $60 million** and adjusted OIBDA growing **22% to $96 million**, expanding margins primarily due to revenue mix and acquisition impacts [Music Publishing Revenue](index=6&type=section&id=Music%20Publishing%20Revenue) Music Publishing revenue increased across all streams, notably digital, performance, and synchronization, benefiting from digital deal renewals, European live events, and copyright settlements Music Publishing Revenue (Three Months Ended June 30) | Revenue Type | June 30, 2025 ($M) | June 30, 2024 ($M) | Percentage Change | | :--------------------------------- | :------------ | :------------ | :------- | | Total Music Publishing Revenue | $336 | $305 | 10 % | | Performance | $58 | $52 | 11.5 % | | Digital | $204 | $194 | 5.2 % | | Mechanical | $16 | $13 | 23.1 % | | Synchronization | $54 | $42 | 28.6 % | - Digital revenue grew **5.2%** (**4.6% at constant currency**), with streaming revenue up **5.2%** (**4.1% at constant currency**), primarily influenced by digital deal renewals, mainly in the US[21](index=21&type=chunk) - Performance revenue increased **11.5%** (**9.4% at constant currency**) due to growth in concerts, radio, and live events across European territories[21](index=21&type=chunk) - Synchronization revenue grew **28.6%**, primarily due to the timing of other copyright infringement settlements, increased TV and commercial licensing activity, and a **$3 million impact** from the Tempo acquisition[21](index=21&type=chunk) [Music Publishing Operating Income & Adjusted OIBDA](index=6&type=section&id=Music%20Publishing%20Operating%20Income%20%26%20Adjusted%20OIBDA) Music Publishing operating income increased despite higher amortization, while adjusted OIBDA saw significant growth and margin expansion, driven by favorable revenue mix and acquisition impacts Music Publishing Operating Income and Adjusted OIBDA (Three Months Ended June 30) | Metric | June 30, 2025 ($M) | June 30, 2024 ($M) | Percentage Change | | :--------------------------------- | :------------ | :------------ | :------- | | Operating Income | $60 | $53 | 13 % | | Operating Margin | 17.9 % | 17.4 % | +0.5 ppts | | Adjusted OIBDA | $96 | $79 | 22 % | | Adjusted OIBDA Margin | 28.6 % | 25.9 % | +2.7 ppts | - Operating income increased **13.2%**, partially offset by a **$9 million increase in amortization expense** due to acquisition impacts[22](index=22&type=chunk) - Music Publishing adjusted OIBDA grew **21.5%** (**20.0% at constant currency**), with adjusted OIBDA margin improving **2.7 percentage points**, driven by revenue mix and acquisition impacts[23](index=23&type=chunk) Recent Developments & Company Information This section covers Warner Music Group's recent dividend announcement, an overview of its global music entertainment business, and important disclosures regarding forward-looking statements and investor resources [Dividend Announcement](index=6&type=section&id=Dividend%20Announcement) Warner Music Group's Board of Directors declared a regular quarterly cash dividend of **$0.19 per share** for Class A and Class B common stock, payable on September 3, 2025 - The Board of Directors declared a regular quarterly cash dividend of **$0.19 per share** on the company's Class A and Class B common stock[24](index=24&type=chunk) - The dividend is payable on **September 3, 2025**, to stockholders of record as of the close of business on **August 20, 2025**[24](index=24&type=chunk) [About Warner Music Group](index=8&type=section&id=About%20Warner%20Music%20Group) Warner Music Group is a global music entertainment company with over **200 years of history**, encompassing iconic recorded music labels and Warner Chappell Music, a leading music publisher with a catalog of over **one million copyrighted works** - Warner Music Group, with over **200 years of history**, is a global home to creative artists, songwriters, and companies driving culture worldwide[27](index=27&type=chunk) - WMG's Recorded Music division is anchored by four iconic companies: **Atlantic, Elektra, Parlophone, and Warner Records**, complemented by renowned labels such as TenThousand Projects, 300 Entertainment, and Asylum[27](index=27&type=chunk) - Warner Chappell Music, originating from Chappell & Company founded in 1811, is one of the world's leading music publishers, boasting a catalog of over **one million copyrighted works** across various musical genres[27](index=27&type=chunk) [Forward-Looking Statements & Investor Information](index=8&type=section&id=Forward-Looking%20Statements%20%26%20Investor%20Information) This report contains forward-looking statements reflecting Warner Music Group's current views on future events and financial performance, subject to various risks and uncertainties, with investors advised to consult SEC filings for detailed risk factors and company websites for investor information and email alerts - This communication contains forward-looking statements, identified by words like "estimate," "expect," "anticipate," "plan," "intend," "believe," "forecast," or similar expressions, reflecting Warner Music Group's current views on future events and financial performance[28](index=28&type=chunk) - Forward-looking statements are subject to various risks, uncertainties, and other factors that could cause actual results to differ materially from expectations, with investors advised to refer to the company's Form 10-K, Form 10-Q, and other SEC filings for factors that could cause actual results to differ significantly[28](index=28&type=chunk) - The company maintains an investor website (www.wmg.com) as a channel for important corporate information, regularly posting financial and other material information at http://investors.wmg.com, where investors can sign up for email alerts[29](index=29&type=chunk) Supplemental Financial Information This section provides definitions and reconciliations for non-GAAP financial measures, along with detailed consolidated financial statements, segment-level performance data, and notable items impacting results [Non-GAAP Financial Measures](index=11&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and explains Warner Music Group's key non-GAAP financial measures, including Adjusted OIBDA, Free Cash Flow, and Constant Currency, used to assess operating performance and liquidity as supplements to US GAAP metrics [Adjusted OIBDA Definition](index=11&type=section&id=Adjusted%20OIBDA%20Definition) Adjusted OIBDA is defined as operating income (loss) before non-cash depreciation and amortization, adjusted for non-cash equity-based compensation and other items affecting comparability - Adjusted OIBDA is defined as operating income (loss) before non-cash depreciation of tangible assets and non-cash amortization of intangible assets, further adjusted to exclude non-cash equity-based compensation and related expenses, and certain items impacting comparability, such as gains/losses on asset disposals and restructuring transformation costs[34](index=34&type=chunk) - The company considers Adjusted OIBDA an important indicator of the strength and performance of its business operations, but it should not be considered an alternative to operating income (loss) or net income (loss) reported under US GAAP[34](index=34&type=chunk) [Free Cash Flow Definition](index=17&type=section&id=Free%20Cash%20Flow%20Definition) Free Cash Flow is defined as cash flow from operating activities less capital expenditures, used to assess operational performance and available cash for various financial obligations and investments - Free Cash Flow is defined as cash flow provided by operating activities less capital expenditures[42](index=42&type=chunk) - The company uses Free Cash Flow to assess operating performance and cash available for debt repayment, working capital needs, capital expenditures, strategic acquisitions and investments, dividend payments, or debt repurchases[42](index=42&type=chunk) - Free Cash Flow is not a performance measure calculated in accordance with US GAAP and should not be considered in isolation or as a substitute for net income (loss) or cash flow from operating activities[43](index=43&type=chunk) [Constant Currency Explanation](index=15&type=section&id=Constant%20Currency%20Explanation) Constant currency information compares revenue and adjusted OIBDA by assuming consistent exchange rates across periods, aiding in understanding operational results and performance evaluation - Constant currency information compares revenue and Adjusted OIBDA by assuming exchange rates remain consistent across periods, aiding in understanding operational results and evaluating performance against prior periods[38](index=38&type=chunk) - Constant currency is calculated by applying the current year's foreign exchange rates to the prior year's revenue and Adjusted OIBDA[38](index=38&type=chunk) - Revenue and Adjusted OIBDA at constant currency are supplemental non-GAAP measures and should not be considered alternatives to revenue and Adjusted OIBDA reported under US GAAP[38](index=38&type=chunk) [Detailed Financial Statements and Reconciliations](index=8&type=section&id=Detailed%20Financial%20Statements%20and%20Reconciliations) This section provides comprehensive financial tables, including condensed consolidated statements of operations, balance sheets, cash flows, digital revenue breakdown, detailed reconciliations for non-GAAP measures like Adjusted OIBDA and Free Cash Flow, and revenue and OIBDA by geography and segment, along with notable items impacting performance [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This table presents the condensed consolidated statements of operations, detailing revenue, costs, operating income, and net income (loss) for the three months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations (Three Months Ended June 30) | Metric | June 30, 2025 ($M) | June 30, 2024 ($M) | Percentage Change | | :--------------------------------- | :------------ | :------------ | :------- | | Revenue | $1,689 | $1,554 | 9 % | | Total Costs and Expenses | $(1,520) | $(1,348) | 13 % | | Operating Income | $169 | $207 | -18 % | | Net (Loss) Income | $(16) | $141 | — % | | Net (Loss) Income Attributable to Warner Music Group Corp | $(16) | $139 | — % | | Class A – Basic and Diluted EPS | $(0.03) | $0.27 | | | Class B – Basic and Diluted EPS | $(0.03) | $0.27 | | [Condensed Consolidated Balance Sheets](index=10&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This table provides the condensed consolidated balance sheets, outlining assets, liabilities, and equity as of June 30, 2025, compared to September 30, 2024 Condensed Consolidated Balance Sheets (As of June 30, 2025 vs. September 30, 2024) | Metric | June 30, 2025 ($M) | September 30, 2024 ($M) | Percentage Change | | :--------------------------------- | :------------ | :------------ | :------- | | Cash and Equivalents | $527 | $694 | -24 % | | Total Current Assets | $2,678 | $2,643 | 1 % | | Total Assets | $9,777 | $9,155 | 7 % | | Total Current Liabilities | $4,050 | $3,897 | 4 % | | Total Liabilities | $8,965 | $8,480 | 6 % | | Total Equity | $812 | $675 | 20 % | | Total Liabilities and Equity | $9,777 | $9,155 | 7 % | [Summarized Statements of Cash Flows](index=11&type=section&id=Summarized%20Statements%20of%20Cash%20Flows) This table summarizes cash flows from operating, investing, and financing activities, showing the net change in cash and equivalents for the three months ended June 30, 2025 and 2024 Summarized Statements of Cash Flows (Three Months Ended June 30) | Metric | June 30, 2025 ($M) | June 30, 2024 ($M) | | :--------------------------------- | :------------ | :------------ | | Cash Flow from Operations | $46 | $188 | | Cash Flow Used in Investing Activities | $(71) | $(76) | | Cash Flow Used in Financing Activities | $(96) | $(90) | | Net (Decrease) Increase in Cash and Equivalents | $(110) | $20 | [Digital Revenue Summary](index=11&type=section&id=Digital%20Revenue%20Summary) This table provides a summary of digital revenue by segment and type, including streaming, downloads, and other digital income, for the three months ended June 30, 2025 and 2024 Digital Revenue Summary (Three Months Ended June 30) | Segment/Type | June 30, 2025 ($M) | June 30, 2024 ($M) | Percentage Change | | :--------------------------------- | :------------ | :------------ | :------- | | Recorded Music Streaming | $895 | $863 | 4 % | | Recorded Music Downloads and Other Digital | $34 | $19 | 79 % | | Total Recorded Music Digital Revenue | $929 | $882 | 5 % | | Music Publishing Streaming | $202 | $192 | 5 % | | Total Music Publishing Digital Revenue | $204 | $194 | 5 % | | Consolidated Streaming | $1,097 | $1,055 | 4 % | | Total Digital Revenue | $1,132 | $1,075 | 5 % | [Reconciliation of Net Income to Adjusted OIBDA](index=12&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20OIBDA) This table reconciles net income (loss) to adjusted OIBDA, detailing adjustments for amortization, depreciation, restructuring, impairment, and non-cash equity-based compensation for the three months ended June 30, 2025 and 2024 Reconciliation of Net Income to Adjusted OIBDA (Three Months Ended June 30) | Metric | June 30, 2025 ($M) | June 30, 2024 ($M) | Percentage Change | | :--------------------------------- | :------------ | :------------ | :------- | | Net (Loss) Income | $(16) | $141 | — % | | Operating Income | $169 | $207 | -18 % | | Amortization Expense | $67 | $55 | 22 % | | Depreciation Expense | $29 | $25 | 16 % | | Restructuring and Impairment | $69 | $1 | — % | | Non-Cash Equity-Based Compensation and Other Related Costs | $16 | $11 | 45 % | | Adjusted OIBDA | $373 | $316 | 18 % | [Reconciliation of Segment Operating Income to Adjusted OIBDA](index=13&type=section&id=Reconciliation%20of%20Segment%20Operating%20Income%20to%20Adjusted%20OIBDA) This section provides detailed reconciliations of operating income to adjusted OIBDA for WMG total, Recorded Music, and Music Publishing segments, including adjustments for depreciation, amortization, restructuring, and non-cash equity compensation Total WMG Adjusted OIBDA Reconciliation (Three Months Ended June 30) | Metric | June 30, 2025 ($M) | June 30, 2024 ($M) | Percentage Change | | :--------------------------------- | :------------ | :------------ | :------- | | Total WMG Operating Income – GAAP | $169 | $207 | -18 % | | Depreciation and Amortization Expense | $96 | $80 | 20 % | | Restructuring and Impairment | $69 | $1 | — % | | Non-Cash Equity-Based Compensation and Other Related Costs | $16 | $11 | 45 % | | Total WMG Adjusted OIBDA | $373 | $316 | 18 % | Recorded Music Adjusted OIBDA Reconciliation (Three Months Ended June 30) | Metric | June 30, 2025 ($M) | June 30, 2024 ($M) | Percentage Change | | :--------------------------------- | :------------ | :------------ | :------- | | Recorded Music Operating Income – GAAP | $201 | $230 | -13 % | | Depreciation and Amortization Expense | $47 | $43 | 9 % | | Restructuring and Impairment | $69 | $0 | — % | | Non-Cash Equity-Based Compensation and Other Related Costs | $4 | $6 | -33 % | | Recorded Music Adjusted OIBDA | $321 | $281 | 14 % | Music Publishing Adjusted OIBDA Reconciliation (Three Months Ended June 30) | Metric | June 30, 2025 ($M) | June 30, 2024 ($M) | Percentage Change | | :--------------------------------- | :------------ | :------------ | :------- | | Music Publishing Operating Income – GAAP | $60 | $53 | 13 % | | Depreciation and Amortization Expense | $35 | $25 | 40 % | | Non-Cash Equity-Based Compensation and Other Related Costs | $1 | $1 | — % | | Music Publishing Adjusted OIBDA | $96 | $79 | 22 % | [Revenue by Geography and Segment](index=15&type=section&id=Revenue%20by%20Geography%20and%20Segment) This section presents revenue breakdowns by geographic region (US and International) and by business segment (Recorded Music and Music Publishing), both at constant currency, for the three months ended June 30, 2025 and 2024 Revenue by Geography (Three Months Ended June 30, Constant Currency) | Geographic Region | June 30, 2025 ($M) | June 30, 2024 (Constant Currency, $M) | Percentage Change (Constant Currency) | | :--------------------------------- | :------------ | :-------------------- | :------------------ | | US Recorded Music | $536 | $517 | 4 % | | US Music Publishing | $186 | $161 | 16 % | | International Recorded Music | $818 | $755 | 8 % | | International Music Publishing | $150 | $146 | 3 % | | Total Revenue | $1,689 | $1,578 | 7 % | Revenue by Segment (Three Months Ended June 30, Constant Currency) | Segment | June 30, 2025 ($M) | June 30, 2024 (Constant Currency, $M) | Percentage Change (Constant Currency) | | :--------------------------------- | :------------ | :-------------------- | :------------------ | | Recorded Music | $1,354 | $1,272 | 6 % | | Music Publishing | $336 | $307 | 9 % | | Total Revenue | $1,689 | $1,578 | 7 % | [Adjusted OIBDA by Segment](index=16&type=section&id=Adjusted%20OIBDA%20by%20Segment) This table presents adjusted OIBDA by segment for WMG total, Recorded Music, and Music Publishing, at constant currency, for the three months ended June 30, 2025 and 2024 Adjusted OIBDA by Segment (Three Months Ended June 30, Constant Currency) | Segment | June 30, 2025 ($M) | June 30, 2024 (Constant Currency, $M) | Percentage Change (Constant Currency) | | :--------------------------------- | :------------ | :-------------------- | :------------------ | | Total WMG Adjusted OIBDA | $373 | $322 | 15.8 % | | Recorded Music Adjusted OIBDA | $321 | $286 | 12.2 % | | Music Publishing Adjusted OIBDA | $96 | $80 | 20.0 % | [Notable Items](index=17&type=section&id=Notable%20Items) This section highlights specific items that significantly impacted revenue and adjusted OIBDA for Recorded Music in Q3 FY2025, including copyright settlements and the BMG termination agreement Notable Items Impacting Revenue (Q3 FY2025) | Item | Impact on Recorded Music Revenue (Q3 2025, $M) | | :--------------------------------- | :--------------------------------- | | Downloads and Other Digital - Copyright Settlement | $16 | Notable Items Impacting Adjusted OIBDA (Q3 FY2025) | Item | Impact on Recorded Music Adjusted OIBDA (Q3 2025, $M) | | :--------------------------------- | :--------------------------------- | | Copyright Settlement | $9 | - The BMG termination agreement negatively impacted Recorded Music revenue by **$14 million** compared to the prior year (comprising **$10 million in physical revenue** and **$4 million in streaming revenue**)[6](index=6&type=chunk)[15](index=15&type=chunk) - The prior year included **$22 million in incremental Recorded Music streaming revenue** from digital service providers (DSP make-whole payments), affecting year-over-year comparison[6](index=6&type=chunk)[15](index=15&type=chunk) [Calculation of Free Cash Flow](index=18&type=section&id=Calculation%20of%20Free%20Cash%20Flow) This table details the calculation of free cash flow by subtracting capital expenditures from cash flow from operating activities for the three months ended June 30, 2025 and 2024 Calculation of Free Cash Flow (Three Months Ended June 30) | Metric | June 30, 2025 ($M) | June 30, 2024 ($M) | | :--------------------------------- | :------------ | :------------ | | Cash Flow from Operations | $46 | $188 | | Less: Capital Expenditures | $39 | $28 | | Free Cash Flow | $7 | $160 |

Exhibit 99.1 PRESS RELEASE Ingles Markets, Inc. Contact: Pat Jackson, Chief Financial Officer pjackson@ingles-markets.com (828) 669-2941 (Ext. 223) ASHEVILLE, N.C. - Ingles Markets, Incorporated (NASDAQ: IMKTA) today reported results for the three and nine months ended June 28, 2025. August 7, 2025 For Immediate Release Ingles Markets, Incorporated Reports Results for Third Quarter and First Nine Months of Fiscal 2025 Robert P. Ingle II, Chairman of the Board, stated, "We appreciate our associates as they c ...

Table of Contents 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 June 30, 2025 OR (Exact name of registrant as specified in its charter) Virginia (State or other jurisdiction of incorporation or organization) ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission ...