Warner Music Group has revealed its fiscal first-quarter financial results for the period ended December 31, 2024 (Q4 in the calendar).
The major has issued a couple of big announcements to coincide with its financial results – a new expanded Spotify deal promising “deeper music and video catalogue, further paid subscription tiers and differentiated content bundles”, as well as the acquisition of investment vehicle Tempo.
Warner Music revenue was down 3.6% (all figures are constant currency) year-on-year in Q4 to $1.67 billion. However, taking into account various factors affecting comparison with the prior year quarter (including the termination of the streaming deal with BMG), revenue was up 4.4%.
The $75m impact of a licensing agreement extension for an artist’s catalogue in the prior year quarter affected operating income in this period (down 38.5% to $214 million). Restructuring and impairment charges also impacted the result.
Recorded Music revenue was down 5.9% year-on-year as a result of decreases across digital, licensing & artist services and expanded-rights revenues, partially offset by growth in physical revenue. Excluding the impact of various factors affecting comparison with the prior year’s quarter, including a digital licence renewal, Recorded Music revenue increased 3.8%.
Recorded Music streaming revenue was up 2.6% – or 6.6% once adjusted for the impact of those factors mentioned above.
Physical revenue increased 8.5% year-on-year. Adjusted for the impact of the BMG termination of $16 million, physical revenue increased 21.2%, driven by strong releases in the Q4 period, primarily in the US and Japan. Major sellers included Linkin Park, Charli XCX, Teddy Swims, Mariya Takeuchi and Benson Boone.
This quarter, we saw success with new stars, global superstars, longtime legends and irreplaceable catalogue
Robert Kyncl
Music Publishing revenue increased by 7.0% year-on-year. The increase was driven by growth across digital, performance and other revenue, partially offset by lower mechanical revenue. Sync revenue was flat compared to the prior-year quarter.
Publishing digital revenue increased 6.2% and streaming revenue increased 6.8%, reflecting continued market and catalogue growth. Performance revenue increased 12.0% due to an increase in touring activity outside the US and higher US radio activity. Mechanical revenue decreased 6.7%.
Robert Kyncl, CEO of Warner Music Group, said: “This quarter, we saw success with new stars, global superstars, longtime legends and irreplaceable catalogue. In our ongoing effort to both grow the pie and grow our share of the pie, we are increasing our A&R spend, acquiring valuable catalogues, and striking important agreements with streaming services. As we drive efficiencies, we will enhance our virtuous cycle of reinvestment, creating new opportunities for talent, long-term growth, and shareholder value.”
Bryan Castellani, CFO of Warner Music Group, added: “While temporary macro conditions created some pressure this quarter, the engine of our business is strong. Our results were underpinned by the performance of our new releases and catalogue, as well as healthy global subscriber trends. We are confident in our outlook, especially as our industry continues to evolve monetisation models, which will help fuel our future growth.”
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