Warner Music(US:WMG)2022-08-09 11:29Financial Performance - Warner Music Group reported a significant increase in revenue, with a year-over-year growth of 20% for the quarter ended June 30, 2022, reaching $1.5 billion[165]. - Total revenues increased by $92 million, or 7%, to $1,432 million for the three months ended June 30, 2022, compared to $1,340 million for the same period in 2021[186]. - Total revenues increased by $497 million, or 13%, to $4,422 million for the nine months ended June 30, 2022, compared to $3,925 million for the same period in 2021[233]. - The company's net income for the twelve months ended June 30, 2022, was $435 million, up from $278 million in the previous year, representing a growth of approximately 56.5%[309]. - Net income increased by $64 million to $125 million for the three months ended June 30, 2022, compared to $61 million in the same period in 2021[212]. Revenue Breakdown - Digital revenue accounted for 75% of total revenue, highlighting the growing importance of digital distribution channels[173]. - Recorded Music revenues increased by $37 million, or 3%, to $1,189 million for the three months ended June 30, 2022, from $1,152 million for the same period in 2021[189]. - Artist services and expanded-rights revenue increased by $57 million, or 43%, primarily due to higher touring activity[190]. - Music Publishing revenues increased by $56 million, or 30%, to $245 million for the three months ended June 30, 2022, from $189 million for the same period in 2021[191]. - Streaming revenue decreased by $8 million, or 1%, to $773 million for the three months ended June 30, 2022, impacted by unfavorable foreign currency exchange rates of $28 million[190]. Cost and Expenses - Total cost of revenues increased by $85 million, or 12%, to $766 million, with artist and repertoire costs rising by $42 million, or 9%[195]. - Selling, general and administrative expenses increased by $14 million, or 3%, to $451 million, while expressed as a percentage of revenue, it decreased to 31% from 33%[198]. - Total cost of revenues for Recorded Music increased by $46 million, or 8%, to $606 million for the three months ended June 30, 2022, from $560 million for the same period in 2021[217]. - Selling, general and administrative expenses for Recorded Music increased by $15 million, or 4%, to $371 million for the three months ended June 30, 2022, from $356 million for the same period in 2021[219]. OIBDA and Margins - The company's OIBDA for the same quarter was $300 million, reflecting a 15% increase compared to the previous year[165]. - OIBDA decreased by $8 million to $233 million, with an OIBDA margin decrease to 16% from 18% due to higher costs and lower margin revenue streams[204]. - OIBDA increased by $72 million, or 10%, to $808 million for the nine months ended June 30, 2022, with an OIBDA margin decreasing to 18% from 19%[251]. - Recorded Music OIBDA decreased by $26 million to $224 million for the three months ended June 30, 2022, from $250 million for the same period in 2021[220]. International Operations - The company has expanded its Recorded Music operations internationally, conducting business in over 70 countries[170]. - International Recorded Music revenues increased by $26 million, or 4%, to $674 million for the three months ended June 30, 2022, from $648 million for the same period in 2021[189]. - International revenue increased by $35 million, or 5%, to $782 million, with a 14% increase when excluding the unfavorable impact of foreign currency exchange rates[194]. Digital Strategy and Growth - Future growth is anticipated from the continued expansion of digital services and the integration of marketing strategies across all distribution channels[173]. - The company aims to enhance its competitive position by developing new distribution channels and monetizing music through innovative formats[157]. - Digital revenues increased by $264 million, or 10%, to $2,877 million for the nine months ended June 30, 2022, driven by a growth in streaming services[234]. Debt and Financial Position - As of June 30, 2022, total debt was $3.785 billion, with net debt of $3.440 billion after accounting for $345 million in cash and equivalents[282]. - The company declared a cash dividend of $0.15 per share on May 13, 2022, resulting in total cash dividends of approximately $79 million for the three months ended June 30, 2022[302]. - The company’s ability to pay dividends may be restricted if the Total Indebtedness to EBITDA Ratio exceeds 3.50:1.00[300]. - The company believes that funds generated from operations and available cash will be sufficient to meet debt service, working capital, and capital expenditure requirements for the foreseeable future[317]. Market Risks and Economic Factors - The company is exposed to market risks from changes in foreign currency exchange rates and interest rates, which could impact future cash flows[319]. - Inflationary factors have not had a material effect on the company's business or financial condition to date, but significant inflation could adversely affect operations[324]. - A hypothetical 10% depreciation of the U.S. dollar against foreign currencies would decrease the fair value of foreign exchange forward contracts by $4 million[321].