Warner Music(US:WMG)2024-11-21 12:35Revenue Performance - The company reported a revenue benefit of approximately $73 million for the fiscal year ended September 30, 2022, primarily from Recorded Music streaming revenue due to an additional week in the fiscal calendar[329]. - Total revenues increased by $389 million, or 6%, to $6,426 million for the fiscal year ended September 30, 2024, compared to $6,037 million for the prior year[340]. - Digital revenues increased by $291 million, or 7%, to $4,280 million for the fiscal year ended September 30, 2024, representing 67% of consolidated revenues[342]. - Recorded Music revenues rose by $268 million, or 5%, to $5,223 million for the fiscal year ended September 30, 2024, with U.S. revenues at $2,210 million[343]. - Music Publishing revenues increased by $122 million, or 11%, to $1,210 million for the fiscal year ended September 30, 2024[340]. - The overall increase in Recorded Music revenue was driven by increases in digital, licensing, and physical revenues[427]. Revenue Sources - Recorded Music revenues are derived from four main sources: digital, physical, artist services and expanded rights, and licensing[322]. - Music Publishing revenues are generated from five main sources: digital, performance, mechanical, synchronization, and other[327]. - The company has diversified its revenue streams by entering into expanded-rights deals with recording artists, allowing participation in activities beyond traditional recorded music[322]. Digital Revenue Insights - The company emphasizes the importance of digital revenues, which vary by region and are expected to grow with new technologies[321]. - Total digital revenues for the fiscal year ended September 30, 2024 included U.S. revenues of $2,039 million and international revenues of $2,243 million, representing 48% and 52% of total digital revenues, respectively[342]. - Digital revenue in Music Publishing increased by $94 million, or 14%, with streaming revenue growing by $96 million, or 15%, to $752 million for the fiscal year ended September 30, 2024[346]. - Adjusted for the impacts of the BMG Termination and the Digital License Renewal, Recorded Music streaming revenue grew by 9%[344]. Strategic Restructuring - The Company announced a Strategic Restructuring Plan in February 2024, expecting a 13% reduction in overall headcount and incurring approximately $210 million in total non-recurring restructuring charges[330]. - For the fiscal year ended September 30, 2024, the Company recognized $178 million in restructuring and impairments related to the Strategic Restructuring Plan, including $121 million in severance costs[330]. - The Company expects to allocate cost savings from the Strategic Restructuring Plan to increase investment in core Recorded Music and Music Publishing businesses[330]. - The company plans to reinvest savings from restructuring into technology and other business areas[439]. Financial Performance Metrics - The company’s Adjusted OIBDA is a key performance measure, adjusted to exclude non-cash stock-based compensation and other items affecting comparability[309]. - Adjusted OIBDA increased by $197 million to $1,432 million for the fiscal year ended September 30, 2024, representing a 16% increase from $1,235 million in 2023[388]. - Adjusted OIBDA margin improved to 22% for the fiscal year ended September 30, 2024, up from 20% in 2023, driven by strong operating performance and restructuring savings[390]. - Operating income increased by $33 million to $823 million for the fiscal year ended September 30, 2024, up from $790 million in 2023, due to improved Adjusted OIBDA and lower amortization expenses[407]. Costs and Expenses - Total cost of revenues increased by $178 million, or 6%, to $3,355 million for the fiscal year ended September 30, 2024[363]. - Artist and repertoire costs increased by $169 million to $2,167 million for the fiscal year ended September 30, 2024, representing 34% of revenue[364]. - Total selling, general and administrative expense increased by $53 million, or 3%, to $1,879 million for the fiscal year ended September 30, 2024[373]. - General and administrative expense increased by $98 million to $1,089 million for the fiscal year ended September 30, 2024, representing 17% of revenue[374]. Debt and Liquidity - At September 30, 2024, the company had $4.014 billion of debt and $694 million of cash and equivalents, resulting in a net debt of $3.320 billion[463]. - The company believes its primary sources of liquidity will be sufficient to support existing operations over the next twelve months[479]. - The company's S&P corporate credit rating improved from B in 2017 to BBB- in August 2024, with a stable outlook[480]. - The weighted-average interest rate on outstanding indebtedness decreased from 10.5% in 2011 to 4.3% as of September 30, 2024[480]. International Revenue - International revenue increased by $286 million, or 9%, to $3,563 million for the fiscal year ended September 30, 2024, with international Recorded Music revenue rising by $242 million, or 9%[358]. - U.S. Recorded Music revenues accounted for 42% of total revenues in 2024, while international revenues accounted for 58%[426]. Other Financial Highlights - Net income decreased by $39 million to $478 million for the fiscal year ended September 30, 2024, compared to $439 million in 2023, reflecting various operational factors[420]. - The company recorded a pre-tax gain of $32 million from divestitures during the fiscal year ended September 30, 2024[385]. - Cash provided by operating activities was $754 million for the fiscal year ended September 30, 2024, compared to $687 million for the fiscal year ended September 30, 2023, representing a $67 million, or 10%, increase[466].