Financial Data and Key Metrics Changes - Total revenue increased by 7%, with adjusted OIBDA rising by 16% and a margin of 22.1%, reflecting a 170 basis point increase year-over-year [27] - Adjusted for notable items, total revenue grew by 8% and adjusted OIBDA increased by 17%, maintaining a margin of 21.8% [27] - Operating cash flow decreased to $46 million from $188 million in the prior year quarter, with free cash flow dropping to $7 million from $160 million [30][31] Business Line Data and Key Metrics Changes - Recorded music revenue increased by 6% or 8% on an adjusted basis, driven by growth in streaming, licensing, and artist services [28] - Recorded music streaming revenue grew by 3%, with subscription growth at 4% and ad-supported decline at 2% [28] - Music publishing revenue increased by 9%, driven by growth across performance, mechanical, digital, and sync revenue [28] Market Data and Key Metrics Changes - Recorded music market share in the U.S. increased by roughly one percentage point year-over-year, indicating growth in key regions [6][29] - The company is seeing positive improvements globally across EMEA, APAC, and LatAm markets [29] Company Strategy and Development Direction - The company is focused on three strategic priorities: growing market share, increasing the value of music, and improving efficiency [5][11] - A $1.2 billion joint venture with Bain Capital was announced to accelerate M&A activity and expand catalog acquisitions [11][25] - A strategic reorganization plan was introduced to generate $300 million in cost savings, aimed at future-proofing the company and unlocking growth [14][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, citing strong performance in charts and market share gains [5][33] - The outlook for 2026 and beyond is promising, with expectations for financial performance to reflect the success of artists and songwriters [33] - Management emphasized the importance of protecting artists' rights and adapting to the evolving landscape of AI in the music industry [12][13] Other Important Information - The company is committed to returning capital to shareholders, with a $100 million buyback authorization and a 6% increase in quarterly dividends [26] - The company has made significant investments in technology and infrastructure to enhance operational efficiency and artist support [17][18] Q&A Session Summary Question: Strategy changes and resource allocation - Management highlighted the importance of freeing up capital through reorganization to sustain future growth and emphasized the focus on high-potential markets [36][38] Question: Subscription streaming growth and cash conversion - Management expressed confidence in future streaming performance, citing healthy industry dynamics and the impact of recent DSP renewals [45][50][51] - Cash conversion remains a priority, with a target of 50% to 60% [47][48] Question: Success in breaking new stars and catalog acquisitions - Management attributed success to strong artist development and a skilled team, emphasizing the importance of global infrastructure [56][58] - The joint venture with Bain is seen as a critical component for accelerating catalog acquisitions [61][62] Question: Cost savings program and organizational changes - The cost savings program aims to create a balanced organization that drives growth while delivering savings [66][70] - Management is focused on investing in key markets and enhancing marketing tools to discover new talent [69][70] Question: Ad-supported streaming trends - Management noted growth in the core DSP ad business but acknowledged challenges in the short-form video content sector [78][82] Question: Super premium experience and interactive music - Management is in discussions with partners to evolve the super premium experience, recognizing the potential for interactivity in music [86][90] Question: Insights from gaming industry experience - Management highlighted the opportunity to offer more premium products and the importance of execution in capturing market potential [94][96]

Warner Music (WMG) Q3 2025 Earnings Call August 07, 2025 08:30 AM ET Speaker0Welcome to Warner Music Group's Third Quarter Earnings Call for the period ended 06/30/2025. At the request of Warner Music Group, today's call is being recorded for replay purposes. And if you object, you may disconnect at any time. I would now like to turn the call over to your host, Mr. Karim Chin, Head of Investor Relations.You may begin.Speaker1Good morning, everyone, and welcome to Warner Music Group's fiscal third quarter ea ...

Financial Data and Key Metrics Changes - The company's revenue increased by 1% in Q2, with recorded music revenue growing by 1% and music publishing revenue growing by 3% [9][25] - Adjusted OIBDA decreased by 1%, with an adjusted OIBDA margin of 20.4%, a decrease of 50 basis points compared to the prior year quarter [9][25] - Operating cash flow increased to $69 million from a use of $31 million in the prior year quarter, primarily due to timing of working capital items [28] - Free cash flow increased to $33 million from a use of $57 million in the prior year quarter [29] Business Line Data and Key Metrics Changes - Subscription streaming revenue grew by 3%, while ad-supported streaming declined by 3% due to a soft overall ad environment [25][26] - Physical revenue increased by 2% due to strong releases in the U.S. and Japan, partially offset by the BMG roll-off [26] - Artist services and expanded rights revenue decreased by 6% due to lower concert promotion revenue, primarily in France [26] - Music publishing total revenue increased by 3%, with streaming revenue increasing by 2% [27] Market Data and Key Metrics Changes - Market share pressure was noted in China, contributing to the overall performance challenges [9] - The company has seen real progress in high-growth markets such as MENA, Nigeria, and India, where market share has meaningfully increased [13] Company Strategy and Development Direction - The company is focused on three strategic priorities: growing market share, growing the value of music, and increasing efficiency to free up capital for reinvestment [10][20] - The company is increasing its M&A activity to augment growth alongside organic strategies [16][21] - A new app, WMG Pulse, was launched to provide real-time insights for artists, reflecting the company's investment in technology [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a transition period in the industry and expressed optimism about the resilience of music as an art form [9][10] - The company expects challenges experienced in Q2 to persist for the remainder of the fiscal year, resulting in lower subscription streaming growth than previously expected [23] - Management emphasized the importance of protecting artists and songwriters, particularly in the context of AI developments [18][19] Other Important Information - The company announced plans to achieve over $300 million in annualized cost savings, with the majority being reinvested in music and technology [20] - The company welcomed a new CFO, Armin Zerza, who brings a strong track record from Activision Blizzard [7] Q&A Session Summary Question: What confidence can you give investors regarding Warner Music's growth goals? - Management highlighted a strategy focused on growing market share, value of music, and efficiency, with early signs of success in chart performance and market share growth [34][35] Question: Can you provide an update on subscription streaming growth expectations? - Management expects similar trends to Q2 for the remainder of the year, with challenges persisting [39] Question: What is the strategy for growing global market share, particularly in emerging markets? - Management noted success in markets like Mexico and Brazil and emphasized the importance of a new head of Asia to drive growth in China [44][45] Question: What changed regarding expectations for high single-digit subscription growth? - Management cited tough comparisons from the previous year, market pressure, a lighter release schedule, and weakness in China as contributing factors [52][53] Question: Can you elaborate on the investments in ANR and market share goals? - Management indicated a focus on capital allocation and a shift towards a repertoire lens for evaluating opportunities [67]

FISCAL Q2 2025 Earnings Snapshot © Warner Music Group 2025 Confidential 1 Non-GAAP Financial Measures This presentation contains certain non-GAAP financial measures. We provide reconciliations to these non-GAAP financial measures to the most directly comparable GAAP financial measures in our earnings press release, which can be found on our website at investors.wmg.com. © Warner Music Group 2025 Confidential This presentation is a supplement to, and should be read in conjunction with, Warner Music Group's e ...