Warner Music Hits $6B Milestone for the Year After Second-Half Rebound

16 November, 2023

Warner Music Group reported quarterly revenue was up 6% as of Sept. 30, as the third-largest U.S.-based music rode a solid release slate that included the Barbie soundtrack, Zach Bryan and FIFTY FIFTY to eclipse $6 billion in overall annual revenue for the first time.

WMG reported revenue for its fiscal fourth quarter rose to $1.58 billion, driven by a stronger release schedule and a 17% uptick in music publishing revenue of $298 million. Streaming revenue rose by 12.6% overall and digital revenue was up 8% to $1.06 billion compared to the year ago quarter. Net profit edged slightly higher to $154 million from $150 million a year ago.

“We’ve been working hard to build a WMG that will excel in the music industry of tomorrow,” said WMG CEO Robert Kyncl on the company’s earnings call. “Our work is already beginning to bear fruit and I assure you that there is much more excitement to come … Looking forward to a new fiscal year, I’m even more optimistic than I was when I started. We’re excited about the trends we’re seeing in the industry and energized by our plans to capitalize on them.”

WMG’s share price edged slightly lower in pre-market trading, down 0.54% to $32.85 on Thursday at 8:19 a.m. New York time.

Recorded music revenue over the course of the quarter rose 4% to nearly $1.3 billion, bolstered by a 6% increase in digital revenue to $877 million and a 9.6%% increase in streaming revenue ($848 million on its own) on the stronger release schedule and growth in ad-supported revenue, which WMG said reflects the company’s TikTok licensing renewal. Licensing revenue increased 9.2% to 95 million, and artist services and expanded-rights revenue decreased 7.4% to $189 million, due to sagging merchandising revenue. Physical revenue ticked up 5.7% to $130 million, thanks to that aforementioned better slate of albums releases. Downloads? Down 48% for the quarter at just $29 million in revenue.

The growth in music publishing revenues was driven by a 20.8% uptick in digital revenue to $192 million and 28.4% increase in streaming revenue, reflecting the impact of digital deal renewals (ie. TikTok) and a revenue true-up of $14 million from the CRB. Mechanical revenue spiked about 42% — to $17 million — primarily due to the timing of distributions in the quarter, and synchronization was basically flat at $41 million.

WMG prefers to use operating income before depreciation and amortization (OIBDA) as a metric to assess its overall business health, and OIBDA increased 19% to $291 million in the quarter compared to $245 million a year ago. Adjusted OIBDA rose 20% to $317 million from $265 million a year ago.

Key WMG financial highlights for its Q4:

Total revenue rose 6% to $1.586 billion for the fourth quarter 2023, from $1.5 billion in the same quarter 2022.
Net profit, or net income, was up 3% at $154 million this quarter compared to $150 million.
Digital revenue rose 8% to $1.068 billion from $989 million.
Streaming revenue for both recorded music and publishing rose 13% to $1.03 billion.
Recorded revenue rose 4% to $1.291 billion from $1.244 billion.
Publishing revenue rose 17% to $298 million from $254 million.
Operating income was up 30% to $212 million from $163 million.
OIBDA was up 19% to $291 million compared to $245 million.

Key WMG financial highlights for its full fiscal year:

Total revenue rose 2% to $6.037 billion for the fiscal year, from $5.9 billion in 2022.
Recorded revenue flattened at $4.955 billion from $4.966 billion.
Publishing revenue rose 14% to $1.08 billion from $958 million.
Digital revenue rose 3% to $3.9 billion from $3.8 billion in 2022.
Operating income was up 11% to $790 million from $714 million.