Warner Music Group Corp. today announced its second-quarter
financial results for the period ended March 31, 2024.
“This quarter we saw a healthy, dynamic mix of hits across a
range of genres, geographies, and generations,” said Robert Kyncl,
CEO of Warner Music Group. “With our commitment to artist and
songwriter development as our guiding principle, we continue to
discover great talent, build sustainable careers, champion the
value of music, and grow the catalog of tomorrow. We are
positioning WMG for long term growth and look forward to delivering
successful music in the second half of 2024 and beyond.”
“Our performance in the quarter was driven by an acceleration in
Recorded Music subscription streaming growth and continued momentum
in Music Publishing,” said Bryan Castellani, CFO, Warner Music
Group. “Encouraged by the continued growth in engagement and value
of music, we remain focused on delivering on our strategy and
driving long-term shareholder value.”
Total WMG
Total WMG
Summary Results |
(dollars
in millions) |
|
|
|
For the Three Months Ended March 31, 2024 |
|
For the Three Months Ended March 31, 2023 |
|
% Change |
|
For the Six Months Ended March 31, 2024 |
|
For the Six Months Ended March 31, 2023 |
|
% Change |
|
|
(unaudited) |
|
(unaudited) |
|
|
|
(unaudited) |
|
(unaudited) |
|
|
Revenue |
|
$ |
1,494 |
|
|
$ |
1,399 |
|
|
7 |
% |
|
$ |
3,242 |
|
|
$ |
2,887 |
|
|
12 |
% |
Recorded Music revenue |
|
|
1,189 |
|
|
|
1,143 |
|
|
4 |
% |
|
|
2,634 |
|
|
|
2,382 |
|
|
11 |
% |
Music Publishing revenue |
|
|
306 |
|
|
|
257 |
|
|
19 |
% |
|
|
610 |
|
|
|
507 |
|
|
20 |
% |
Operating income |
|
|
119 |
|
|
|
124 |
|
|
-4 |
% |
|
|
473 |
|
|
|
389 |
|
|
22 |
% |
Adjusted OIBDA(1) |
|
|
312 |
|
|
|
286 |
|
|
9 |
% |
|
|
763 |
|
|
|
621 |
|
|
23 |
% |
Net income |
|
|
96 |
|
|
|
37 |
|
|
— |
% |
|
|
289 |
|
|
|
161 |
|
|
80 |
% |
Net cash (used for) provided
by operating activities |
|
|
(31 |
) |
|
|
(6 |
) |
|
— |
% |
|
|
262 |
|
|
|
203 |
|
|
29 |
% |
Free Cash Flow |
|
|
(57 |
) |
|
|
(41 |
) |
|
39 |
% |
|
|
207 |
|
|
|
147 |
|
|
41 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See "Supplemental Disclosures Regarding Non-GAAP Financial
Measures" at the end of this release for details regarding this
measure. |
|
Revenue was up 6.8% (or 6.9% in constant currency). Consistent
with the prior quarter, Recorded Music digital revenue growth was
unfavorably impacted by the termination of the distribution
agreement with BMG (the “BMG Termination”), which resulted in $22
million less revenue compared to the prior-year quarter, and a $4
million unfavorable impact within Recorded Music streaming revenue
due to a renewal with one of the Company’s digital partners (the
“Digital License Renewal”), which resulted in upfront revenue
recognition in the prior quarter. Excluding the BMG Termination and
the Digital License Renewal, total revenue was up 8.8% (or 9.0% in
constant currency).
Digital revenue increased 9.9% (or 10.2% in constant currency)
and streaming revenue increased 10.7% (or 11.1% in constant
currency). Recorded Music streaming revenue increased 7.1% (or 7.7%
in constant currency); however, adjusted for the impact of the BMG
Termination and the Digital License Renewal, Recorded Music
streaming revenue was up 10.5% (or 11.1% in constant currency).
Music Publishing streaming revenue increased 30.3% (or 29.4% in
constant currency). Revenue increases in the quarter were also
driven by growth in Recorded Music licensing revenue and Music
Publishing performance and synchronization revenue, partially
offset by lower Recorded Music physical and artist services and
expanded-rights revenue.
Operating income decreased 4.0% (or 3.3% in constant currency)
from $124 million to $119 million primarily due to the factors
affecting Adjusted OIBDA discussed below, as well as $95 million of
restructuring and non-cash impairment charges, which includes
severance costs of $46 million and an impairment loss of
$50 million due to the exit of certain non-core owned and
operated media properties pursuant to the Company’s restructuring
plan announced in February 2024 (the “Strategic Restructuring
Plan”), compared to $41 million of restructuring charges in the
prior-year quarter, and $5 million of incremental expenses related
to transformation initiatives and other related costs. The decrease
in operating income was partially offset by lower non-cash
stock-based compensation of $11 million, lower amortization
expenses due to certain intangible assets becoming fully amortized
of $4 million, and a $14 million net gain on a divestiture of
certain music publishing rights in the quarter.
Adjusted OIBDA increased 9.1% from $286 million to $312 million
(the same in constant currency) and Adjusted OIBDA margin increased
0.5 percentage points to 20.9% from 20.4% in the prior-year quarter
(or increased 0.4 percentage points to 20.9% from 20.5% in constant
currency). Adjusted OIBDA growth was primarily due to strong
operating performance and $12 million of savings from the March
2023 restructuring plan (the “2023 Restructuring Plan”), partially
offset by the reinvestment of these savings in the Company’s
business including $6 million of incremental investment in
technology in the quarter.
Net income was $96 million compared to $37 million in the
prior-year quarter. The increase in net income was primarily due to
the factors described above, and the impact of exchange rates on
the Company’s Euro-denominated debt resulting in a gain of $21
million in the quarter compared to a loss of $20 million in the
prior-year quarter, partially offset by an increase in interest
expense, net, primarily due to increased costs on the Company’s
variable rate debt.
Basic and Diluted earnings per share were $0.18 for both the
Class A and Class B shareholders due to the net income attributable
to the Company in the quarter of $96 million.
As of March 31, 2024, the Company reported a cash balance
of $587 million, total debt of $3.984 billion and net debt (defined
as total debt, net of deferred financing costs, premiums and
discounts, minus cash and equivalents) of $3.397 billion.
Cash used in operating activities increased to $31 million in
the quarter compared to $6 million in the prior-year quarter. The
increase was largely due to increased artist and repertoire
investment and the timing of working capital, partially offset by
strong operating performance. Capital expenditures decreased 26% to
$26 million from $35 million in the prior-year quarter, driven by
the timing of investment in technology. Free Cash Flow, as defined
below, decreased to a use of $57 million from a use of $41 million
in the prior-year quarter.
Recorded Music
Recorded
Music Summary Results |
(dollars
in millions) |
|
|
|
For the Three Months Ended March 31, 2024 |
|
For the Three Months Ended March 31, 2023 |
|
% Change |
|
For the Six Months Ended March 31, 2024 |
|
For the Six Months Ended March 31, 2023 |
|
% Change |
|
|
(unaudited) |
|
(unaudited) |
|
|
|
(unaudited) |
|
(unaudited) |
|
|
Revenue |
|
$ |
1,189 |
|
|
$ |
1,143 |
|
|
4 |
% |
|
$ |
2,634 |
|
|
$ |
2,382 |
|
|
11 |
% |
Operating income |
|
|
134 |
|
|
|
151 |
|
|
-11 |
% |
|
|
508 |
|
|
|
434 |
|
|
17 |
% |
Adjusted OIBDA(1) |
|
|
272 |
|
|
|
249 |
|
|
9 |
% |
|
|
684 |
|
|
|
548 |
|
|
25 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See
"Supplemental Disclosures Regarding Non-GAAP Financial Measures" at
the end of this release for details regarding this measure. |
Recorded
Music Revenue |
(dollars
in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2024 |
|
For the Three Months Ended March 31, 2023 |
|
For the Three Months Ended March 31, 2023 |
|
For the Six Months Ended March 31, 2024 |
|
For the Six Months Ended March 31, 2023 |
|
For the Six Months Ended March 31, 2023 |
|
|
As reported |
|
As reported |
|
Constant |
|
As reported |
|
As reported |
|
Constant |
|
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
Digital |
|
$ |
848 |
|
|
$ |
796 |
|
|
$ |
792 |
|
|
$ |
1,756 |
|
|
$ |
1,599 |
|
|
$ |
1,600 |
|
Physical |
|
|
111 |
|
|
|
118 |
|
|
|
119 |
|
|
|
265 |
|
|
|
251 |
|
|
|
255 |
|
Total Digital and Physical |
|
|
959 |
|
|
|
914 |
|
|
|
911 |
|
|
|
2,021 |
|
|
|
1,850 |
|
|
|
1,855 |
|
Artist services and
expanded-rights |
|
|
126 |
|
|
|
131 |
|
|
|
130 |
|
|
|
330 |
|
|
|
337 |
|
|
|
342 |
|
Licensing |
|
|
104 |
|
|
|
98 |
|
|
|
99 |
|
|
|
283 |
|
|
|
195 |
|
|
|
198 |
|
Total Recorded
Music |
|
$ |
1,189 |
|
|
$ |
1,143 |
|
|
$ |
1,140 |
|
|
$ |
2,634 |
|
|
$ |
2,382 |
|
|
$ |
2,395 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recorded Music revenue was up 4.0% (or 4.3% in constant
currency) driven by growth in digital and licensing revenue,
partially offset by lower physical and artist services and
expanded-rights revenue. Excluding the impact from the BMG
Termination and the Digital License Renewal, Recorded Music revenue
increased 6.4% (or 6.7% in constant currency). Digital revenue was
up 6.5% (or 7.1% in constant currency) and streaming revenue was up
7.1% (or 7.7% in constant currency). Adjusted for the impact of the
BMG Termination of $20 million and the Digital License Renewal of
$4 million, Recorded Music streaming revenue was up 10.5% (or 11.1%
in constant currency). Streaming revenue reflects growth in
subscription revenue of 8.3% (or 8.8% in constant currency) and
growth in ad-supported revenue of 3.9% (or 4.4% in constant
currency). Adjusted for the BMG Termination and the Digital License
Renewal, subscription revenue increased 12.8% (or 13.5% in constant
currency). Licensing revenue increased 6.1% (or 5.1% in constant
currency), driven by an increase in copyright infringement
settlements. Physical revenue decreased 5.9% (or 6.7% in constant
currency), primarily driven by the timing of new releases. Artist
services and expanded-rights revenue decreased 3.8% (or 3.1% in
constant currency) primarily due to lower merchandising revenue,
partially offset by higher concert promotion revenue in France and
Japan. Major sellers included Zach Bryan, Ed Sheeran, Jack Harlow
and Green Day.
Recorded Music operating income was $134 million, a decrease
from $151 million in the prior-year quarter, and operating margin
was down 1.9 percentage points to 11.3% versus 13.2% in the
prior-year quarter. The decrease in operating income was primarily
driven by severance costs of $42 million and $47 million
of impairment losses on unamortized intangibles primarily due to
the exit of certain non-core owned and operated media properties in
connection with the Strategic Restructuring Plan announced in
February 2024, compared to $41 million of restructuring charges in
the prior-year quarter, partially offset by lower amortization
expenses of $7 million due to certain intangible assets becoming
fully amortized.
Adjusted OIBDA increased 9.2% to $272 million from $249 million
(the same in constant currency) and Adjusted OIBDA margin increased
1.1 percentage points to 22.9% from 21.8% in the prior-year quarter
(the same in constant currency). The increases in Adjusted OIBDA
and Adjusted OIBDA margin were driven by strong operating
performance and $12 million of savings from the 2023 Restructuring
Plan of which a portion has been reinvested in the Company’s
business, partially offset by the unfavorable impact of exchange
rates.
Music Publishing
Music
Publishing Summary Results |
(dollars
in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2024 |
|
For the Three Months Ended March 31, 2023 |
|
% Change |
|
For the Six Months Ended March 31, 2024 |
|
For the Six Months Ended March 31, 2023 |
|
% Change |
|
|
(unaudited) |
|
(unaudited) |
|
|
|
(unaudited) |
|
(unaudited) |
|
|
Revenue |
|
$ |
306 |
|
|
$ |
257 |
|
|
19 |
% |
|
$ |
610 |
|
|
$ |
507 |
|
|
20 |
% |
Operating income |
|
|
69 |
|
|
|
52 |
|
|
33 |
% |
|
|
132 |
|
|
|
101 |
|
|
31 |
% |
Adjusted OIBDA(1) |
|
|
82 |
|
|
|
76 |
|
|
8 |
% |
|
|
168 |
|
|
|
148 |
|
|
14 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See
"Supplemental Disclosures Regarding Non-GAAP Financial Measures" at
the end of this release for details regarding this measure. |
Music
Publishing Revenue |
(dollars
in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2024 |
|
For the Three Months Ended March 31, 2023 |
|
For the Three Months Ended March 31, 2023 |
|
For the Six Months Ended March 31, 2024 |
|
For the Six Months Ended March 31, 2023 |
|
For the Six Months Ended March 31, 2023 |
|
|
As reported |
|
As reported |
|
Constant |
|
As reported |
|
As reported |
|
Constant |
|
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
Performance |
|
$ |
52 |
|
|
$ |
45 |
|
|
$ |
44 |
|
|
$ |
103 |
|
|
$ |
90 |
|
|
$ |
90 |
|
Digital |
|
|
187 |
|
|
|
146 |
|
|
|
147 |
|
|
|
383 |
|
|
|
295 |
|
|
|
298 |
|
Mechanical |
|
|
15 |
|
|
|
16 |
|
|
|
16 |
|
|
|
30 |
|
|
|
30 |
|
|
|
31 |
|
Synchronization |
|
|
48 |
|
|
|
46 |
|
|
|
47 |
|
|
|
87 |
|
|
|
85 |
|
|
|
86 |
|
Other |
|
|
4 |
|
|
|
4 |
|
|
|
4 |
|
|
|
7 |
|
|
|
7 |
|
|
|
7 |
|
Total Music
Publishing |
|
$ |
306 |
|
|
$ |
257 |
|
|
$ |
258 |
|
|
$ |
610 |
|
|
$ |
507 |
|
|
$ |
512 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Music Publishing revenue increased 19.1% (or 18.6% in constant
currency). The increase was driven by growth in digital,
performance and synchronization revenue. Digital revenue increased
28.1% (or 27.2% in constant currency) and streaming revenue
increased 30.3% (or 29.4% in constant currency), reflecting the
continued growth in streaming, the impact of digital deal renewals
and continued investment in the Company’s publishing catalog.
Performance revenue increased 15.6% (or 18.2% in constant currency)
due to strong artist touring activity in Europe. Mechanical revenue
decreased $1 million or 6% (the same in constant currency),
primarily driven by lower physical sales. Synchronization revenue
grew 4.3% (or 2.1% in constant currency), driven by the timing of
copyright infringement settlements.
Music Publishing operating income increased to $69 million
compared to $52 million in the prior-year quarter and operating
margin increased 2.3 percentage points to 22.5%. The increase in
operating income was primarily driven by the same factors affecting
Adjusted OIBDA discussed below, as well as a $14 million net gain
on a divestiture of certain music publishing rights in the
quarter.
Music Publishing Adjusted OIBDA increased 7.9% to $82 million
(the same in constant currency) and Adjusted OIBDA margin decreased
2.8 percentage points to 26.8% from 29.6% in the prior-year quarter
(or decreased 2.7 percentage points to 26.8% from 29.5% in constant
currency). The increase in Adjusted OIBDA was driven by higher
revenue, while the decrease in Adjusted OIBDA margin compared to
the prior-year quarter is primarily attributable to revenue
mix.
Financial details for the quarter can be found in the Company’s
current Quarterly Report on Form 10-Q for the period ended
March 31, 2024, which will be filed this morning with the
Securities and Exchange Commission.
This morning management will be hosting a conference call to
discuss the results at 8:30 A.M. EST. The call will be webcast on
www.wmg.com.
About Warner Music Group
With a legacy extending back over 200 years, Warner Music Group
today is home to an unparalleled family of creative artists,
songwriters, and companies that are moving culture across the
globe. At the core of WMG’s Recorded Music division are four of the
most iconic companies in history: Atlantic, Elektra, Parlophone and
Warner Records. They are joined by renowned labels such as
TenThousand Projects, 300 Entertainment, Asylum, Big Beat,
Canvasback, East West, Erato, FFRR, Fueled by Ramen, Nonesuch,
Reprise, Rhino, Roadrunner, Sire, Spinnin’ Records, Warner Classics
and Warner Music Nashville. Warner Chappell Music – which
traces its origins back to the founding of Chappell & Company
in 1811 – is one of the world’s leading music publishers, with
a catalog of more than one million copyrights spanning every
musical genre from the standards of the Great American Songbook to
the biggest hits of the 21st century.
“Safe Harbor” Statement under Private Securities
Litigation Reform Act of 1995
This communication includes forward-looking statements that
reflect the current views of Warner Music Group about future events
and financial performance. Words such as “estimates,” “expects,”
“anticipates,” “projects,” “plans,” “intends,” “believes,”
“forecasts” and variations of such words or similar expressions
that predict or indicate future events or trends, or that do not
relate to historical matters, identify forward-looking statements.
All forward-looking statements are made as of today, and we
disclaim any duty to update such statements. Our expectations,
beliefs and projections are expressed in good faith and we believe
there is a reasonable basis for them. However, we cannot assure you
that management’s expectations, beliefs and projections will result
or be achieved. Investors should not rely on forward-looking
statements because they are subject to a variety of risks,
uncertainties, and other factors that could cause actual results to
differ materially from our expectations. Please refer to our Form
10-K, Form 10-Qs and our other filings with the U.S. Securities and
Exchange Commission concerning factors that could cause actual
results to differ materially from those described in our
forward-looking statements.
We maintain an Internet site at www.wmg.com. We use our website
as a channel of distribution for material company information.
Financial and other material information regarding Warner Music
Group is routinely posted on and accessible at
http://investors.wmg.com. In addition, you may automatically
receive email alerts and other information about Warner Music Group
by enrolling your email address through the “email alerts” section
at http://investors.wmg.com. Our website and the information posted
on it or connected to it shall not be deemed to be incorporated by
reference into this communication.
Figure 1.
Warner Music Group Corp. – Condensed Consolidated Statements
of Operations, Three and Six Months Ended March 31, 2024 versus
March 31, 2023 |
(dollars
in millions) |
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2024 |
|
For the Three Months Ended March 31, 2023 |
|
% Change |
|
|
(unaudited) |
|
(unaudited) |
|
|
Revenue |
|
$ |
1,494 |
|
|
$ |
1,399 |
|
|
7 |
% |
Cost and
expenses: |
|
|
|
|
|
|
Cost of revenue |
|
|
(791 |
) |
|
|
(721 |
) |
|
10 |
% |
Selling, general and
administrative expenses |
|
|
(446 |
) |
|
|
(452 |
) |
|
-1 |
% |
Restructuring and
impairments |
|
|
(95 |
) |
|
|
(41 |
) |
|
— |
% |
Amortization expense |
|
|
(57 |
) |
|
|
(61 |
) |
|
-7 |
% |
Total costs and
expenses |
|
$ |
(1,389 |
) |
|
$ |
(1,275 |
) |
|
9 |
% |
Net gain on divestiture |
|
|
14 |
|
|
|
— |
|
|
— |
% |
Operating
income |
|
$ |
119 |
|
|
$ |
124 |
|
|
-4 |
% |
Loss on extinguishment of
debt |
|
|
— |
|
|
|
— |
|
|
— |
% |
Interest expense, net |
|
|
(42 |
) |
|
|
(35 |
) |
|
20 |
% |
Other income (expense),
net |
|
|
37 |
|
|
|
(31 |
) |
|
— |
% |
Income before income
taxes |
|
$ |
114 |
|
|
$ |
58 |
|
|
97 |
% |
Income tax expense |
|
|
(18 |
) |
|
|
(21 |
) |
|
-14 |
% |
Net
income |
|
$ |
96 |
|
|
$ |
37 |
|
|
— |
% |
Less: Income attributable to
noncontrolling interest |
|
|
— |
|
|
|
(3 |
) |
|
-100 |
% |
Net income
attributable to Warner Music Group Corp. |
|
$ |
96 |
|
|
$ |
34 |
|
|
— |
% |
|
|
|
|
|
|
|
Net income per share
attributable to common stockholders: |
|
|
|
|
|
|
Class A – Basic and Diluted |
|
$ |
0.18 |
|
|
$ |
0.06 |
|
|
|
Class B – Basic and Diluted |
|
$ |
0.18 |
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended March 31, 2024 |
|
For the Six Months Ended March 31, 2023 |
|
% Change |
|
|
(unaudited) |
|
(unaudited) |
|
|
Revenue |
|
|
3,242 |
|
|
|
2,887 |
|
|
12 |
% |
Cost and
expenses: |
|
|
|
|
|
|
Cost of revenue |
|
|
(1,671 |
) |
|
|
(1,482 |
) |
|
13 |
% |
Selling, general and
administrative expenses |
|
|
(922 |
) |
|
|
(892 |
) |
|
3 |
% |
Restructuring and
impairments |
|
|
(95 |
) |
|
|
(41 |
) |
|
— |
% |
Amortization expense |
|
|
(112 |
) |
|
|
(124 |
) |
|
-10 |
% |
Total costs and
expenses |
|
|
(2,800 |
) |
|
|
(2,539 |
) |
|
10 |
% |
Net gain on divestiture |
|
|
31 |
|
|
|
41 |
|
|
-24 |
% |
Operating
income |
|
|
473 |
|
|
|
389 |
|
|
22 |
% |
Loss on extinguishment of
debt |
|
|
— |
|
|
|
— |
|
|
— |
% |
Interest expense, net |
|
|
(81 |
) |
|
|
(67 |
) |
|
21 |
% |
Other expense, net |
|
|
(13 |
) |
|
|
(92 |
) |
|
-86 |
% |
Income before income
taxes |
|
|
379 |
|
|
|
230 |
|
|
65 |
% |
Income tax expense |
|
|
(90 |
) |
|
|
(69 |
) |
|
30 |
% |
Net
income |
|
|
289 |
|
|
|
161 |
|
|
80 |
% |
Less: Income attributable to
noncontrolling interest |
|
|
(34 |
) |
|
|
(5 |
) |
|
— |
% |
Net income
attributable to Warner Music Group Corp. |
|
|
255 |
|
|
|
156 |
|
|
63 |
% |
|
|
|
|
|
|
|
Net income per share
attributable to common stockholders: |
|
|
|
|
|
|
Class A – Basic and Diluted |
|
$ |
0.49 |
|
|
$ |
0.30 |
|
|
|
Class B – Basic and Diluted |
|
$ |
0.49 |
|
|
$ |
0.30 |
|
|
|
Figure 2.
Warner Music Group Corp. – Condensed Consolidated Balance
Sheets at March 31, 2024 versus September 30, 2023 |
(dollars
in millions) |
|
|
|
|
|
|
|
|
|
March 31, 2024 |
|
September 30, 2023 |
|
% Change |
|
|
(unaudited) |
|
|
|
|
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and equivalents |
|
$ |
587 |
|
|
$ |
641 |
|
|
-8 |
% |
Accounts receivable, net |
|
|
1,197 |
|
|
|
1,120 |
|
|
7 |
% |
Inventories |
|
|
97 |
|
|
|
126 |
|
|
-23 |
% |
Royalty advances expected to be recouped within one year |
|
|
456 |
|
|
|
413 |
|
|
10 |
% |
Prepaid and other current assets |
|
|
113 |
|
|
|
102 |
|
|
11 |
% |
Total current
assets |
|
$ |
2,450 |
|
|
$ |
2,402 |
|
|
2 |
% |
Royalty advances expected to
be recouped after one year |
|
|
759 |
|
|
|
688 |
|
|
10 |
% |
Property, plant and equipment,
net |
|
|
462 |
|
|
|
458 |
|
|
1 |
% |
Operating lease right-of-use
assets, net |
|
|
233 |
|
|
|
245 |
|
|
-5 |
% |
Goodwill |
|
|
2,007 |
|
|
|
1,993 |
|
|
1 |
% |
Intangible assets subject to
amortization, net |
|
|
2,318 |
|
|
|
2,353 |
|
|
-1 |
% |
Intangible assets not subject
to amortization |
|
|
150 |
|
|
|
149 |
|
|
1 |
% |
Deferred tax assets, net |
|
|
30 |
|
|
|
32 |
|
|
-6 |
% |
Other assets |
|
|
322 |
|
|
|
225 |
|
|
43 |
% |
Total
assets |
|
$ |
8,731 |
|
|
$ |
8,545 |
|
|
2 |
% |
Liabilities and
Equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
306 |
|
|
$ |
300 |
|
|
2 |
% |
Accrued royalties |
|
|
2,409 |
|
|
|
2,219 |
|
|
9 |
% |
Accrued liabilities |
|
|
465 |
|
|
|
533 |
|
|
-13 |
% |
Accrued interest |
|
|
18 |
|
|
|
18 |
|
|
— |
% |
Operating lease liabilities, current |
|
|
43 |
|
|
|
41 |
|
|
5 |
% |
Deferred revenue |
|
|
234 |
|
|
|
371 |
|
|
-37 |
% |
Other current liabilities |
|
|
58 |
|
|
|
57 |
|
|
2 |
% |
Total current
liabilities |
|
$ |
3,533 |
|
|
$ |
3,539 |
|
|
— |
% |
Long-term debt |
|
|
3,984 |
|
|
|
3,964 |
|
|
1 |
% |
Operating lease liabilities,
noncurrent |
|
|
239 |
|
|
|
255 |
|
|
-6 |
% |
Deferred tax liabilities,
net |
|
|
236 |
|
|
|
216 |
|
|
9 |
% |
Other noncurrent
liabilities |
|
|
154 |
|
|
|
141 |
|
|
9 |
% |
Total
liabilities |
|
$ |
8,146 |
|
|
$ |
8,115 |
|
|
— |
% |
Equity: |
|
|
|
|
|
|
Class A common stock |
|
$ |
— |
|
|
$ |
— |
|
|
— |
% |
Class B common stock |
|
|
1 |
|
|
|
1 |
|
|
— |
% |
Additional paid-in
capital |
|
|
2,043 |
|
|
|
2,015 |
|
|
1 |
% |
Accumulated deficit |
|
|
(1,310 |
) |
|
|
(1,387 |
) |
|
-6 |
% |
Accumulated other
comprehensive loss, net |
|
|
(301 |
) |
|
|
(322 |
) |
|
-7 |
% |
Total Warner Music
Group Corp. equity |
|
$ |
433 |
|
|
$ |
307 |
|
|
41 |
% |
Noncontrolling interest |
|
|
152 |
|
|
|
123 |
|
|
24 |
% |
Total
equity |
|
|
585 |
|
|
|
430 |
|
|
36 |
% |
Total liabilities and
equity |
|
$ |
8,731 |
|
|
$ |
8,545 |
|
|
2 |
% |
Figure 3.
Warner Music Group Corp. – Summarized Statements of Cash
Flows, Three and Six Months Ended March 31, 2024 versus March 31,
2023 |
(dollars
in millions) |
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2024 |
|
For the Three Months Ended March 31, 2023 |
|
|
(unaudited) |
|
(unaudited) |
Net cash used in operating activities |
|
$ |
(31 |
) |
|
$ |
(6 |
) |
Net cash used in investing
activities |
|
|
(33 |
) |
|
|
(41 |
) |
Net cash used in financing
activities |
|
|
(97 |
) |
|
|
(73 |
) |
Effect of foreign currency
exchange rates on cash and equivalents |
|
|
(6 |
) |
|
|
1 |
|
Net decrease in cash and
equivalents |
|
$ |
(167 |
) |
|
$ |
(119 |
) |
|
|
|
|
|
|
|
For the Six Months Ended March 31, 2024 |
|
For the Six Months Ended March 31, 2023 |
|
|
(unaudited) |
|
(unaudited) |
Net cash provided by operating
activities |
|
$ |
262 |
|
|
$ |
203 |
|
Net cash used in investing
activities |
|
|
(125 |
) |
|
|
(51 |
) |
Net cash used in financing
activities |
|
|
(190 |
) |
|
|
(143 |
) |
Effect of foreign currency
exchange rates on cash and equivalents |
|
|
(1 |
) |
|
|
8 |
|
Net (decrease) increase in
cash and equivalents |
|
$ |
(54 |
) |
|
$ |
17 |
|
Figure 4.
Warner Music Group Corp. – Digital Revenue Summary, Three and
Six Months Ended March 31, 2024 versus March 31, 2023 |
(dollars
in millions) |
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2024 |
|
For the Three Months Ended March 31, 2023 |
|
% Change |
|
|
(unaudited) |
|
(unaudited) |
|
|
Recorded
Music |
|
|
|
|
|
|
Subscription |
|
$ |
615 |
|
|
$ |
568 |
|
|
8 |
% |
Ad-Supported |
|
|
213 |
|
|
|
205 |
|
|
4 |
% |
Streaming |
|
$ |
828 |
|
|
$ |
773 |
|
|
7 |
% |
Downloads and Other Digital |
|
|
20 |
|
|
|
23 |
|
|
-13 |
% |
Total Recorded Music
Digital Revenue |
|
$ |
848 |
|
|
$ |
796 |
|
|
7 |
% |
|
|
|
|
|
|
|
Music
Publishing |
|
|
|
|
|
|
Streaming |
|
$ |
185 |
|
|
$ |
142 |
|
|
30 |
% |
Downloads and Other Digital |
|
|
2 |
|
|
|
4 |
|
|
-50 |
% |
Total Music Publishing
Digital Revenue |
|
$ |
187 |
|
|
$ |
146 |
|
|
28 |
% |
|
|
|
|
|
|
|
Consolidated |
|
|
|
|
|
|
Streaming |
|
$ |
1,013 |
|
|
$ |
915 |
|
|
11 |
% |
Downloads and Other Digital |
|
|
22 |
|
|
|
27 |
|
|
-19 |
% |
Intersegment Eliminations |
|
|
— |
|
|
|
— |
|
|
— |
% |
Total Digital
Revenue |
|
$ |
1,035 |
|
|
$ |
942 |
|
|
10 |
% |
|
|
|
|
|
|
|
|
|
For the Six Months Ended March 31, 2024 |
|
For the Six Months Ended March 31, 2023 |
|
% Change |
|
|
(unaudited) |
|
(unaudited) |
|
|
Recorded
Music |
|
|
|
|
|
|
Subscription |
|
$ |
1,259 |
|
|
$ |
1,127 |
|
|
12 |
% |
Ad-Supported |
|
|
456 |
|
|
|
426 |
|
|
7 |
% |
Streaming |
|
$ |
1,715 |
|
|
$ |
1,553 |
|
|
10 |
% |
Downloads and Other
Digital |
|
|
41 |
|
|
|
46 |
|
|
-11 |
% |
Total Recorded Music
Digital Revenue |
|
$ |
1,756 |
|
|
$ |
1,599 |
|
|
10 |
% |
|
|
|
|
|
|
|
Music
Publishing |
|
|
|
|
|
|
Streaming |
|
$ |
378 |
|
|
$ |
288 |
|
|
31 |
% |
Downloads and Other Digital |
|
|
5 |
|
|
|
7 |
|
|
-29 |
% |
Total Music Publishing
Digital Revenue |
|
$ |
383 |
|
|
$ |
295 |
|
|
30 |
% |
|
|
|
|
|
|
|
Consolidated |
|
|
|
|
|
|
Streaming |
|
$ |
2,093 |
|
|
$ |
1,841 |
|
|
14 |
% |
Downloads and Other Digital |
|
|
46 |
|
|
|
53 |
|
|
-13 |
% |
Intersegment Eliminations |
|
|
— |
|
|
|
— |
|
|
— |
% |
Total Digital
Revenue |
|
$ |
2,139 |
|
|
$ |
1,894 |
|
|
13 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures Regarding Non-GAAP Financial
Measures
We evaluate our operating performance based on several factors,
including the following non-GAAP financial measure:
Adjusted OIBDA
We evaluate our operating performance based on several factors,
including our primary financial measure of operating income (loss)
before non-cash depreciation of tangible assets and non-cash
amortization of intangible assets adjusted to exclude the impact of
non-cash stock-based compensation and other related expenses and
certain items that affect comparability including but not limited
to gains or losses on divestitures and expenses related to
restructuring and transformation initiatives (“Adjusted OIBDA”). We
consider Adjusted OIBDA to be an important indicator of the
operational strengths and performance of our businesses. However, a
limitation of the use of Adjusted OIBDA as a performance measure is
that it does not reflect the periodic costs of certain capitalized
tangible and intangible assets used in generating revenues in our
businesses. Accordingly, Adjusted OIBDA should be considered in
addition to, not as a substitute for, operating income (loss), net
income (loss) attributable to Warner Music Group Corp. and other
measures of financial performance reported in accordance with
United States generally accepted accounting principles (“U.S.
GAAP”). In addition, our definition of Adjusted OIBDA may differ
from similarly titled measures used by other companies.
Figure 5.
Warner Music Group Corp. – Reconciliation of Net Income to
Adjusted OIBDA, Three and Six Months Ended March 31, 2024 versus
March 31, 2023 |
(dollars
in millions) |
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2024 |
|
For the Three Months Ended March 31, 2023 |
|
% Change |
|
|
(unaudited) |
|
(unaudited) |
|
|
Net income attributable to Warner Music Group
Corp. |
|
$ |
96 |
|
|
$ |
34 |
|
|
— |
% |
Income attributable to
noncontrolling interest |
|
|
— |
|
|
|
3 |
|
|
-100 |
% |
Net
income |
|
$ |
96 |
|
|
$ |
37 |
|
|
— |
% |
Income tax expense |
|
|
18 |
|
|
|
21 |
|
|
-14 |
% |
Income including
income taxes |
|
$ |
114 |
|
|
$ |
58 |
|
|
97 |
% |
Other (income) expense,
net |
|
|
(37 |
) |
|
|
31 |
|
|
— |
% |
Interest expense, net |
|
|
42 |
|
|
|
35 |
|
|
20 |
% |
Loss on extinguishment of
debt |
|
|
— |
|
|
|
— |
|
|
— |
% |
Operating
income |
|
$ |
119 |
|
|
$ |
124 |
|
|
-4 |
% |
Amortization expense |
|
|
57 |
|
|
|
61 |
|
|
-7 |
% |
Depreciation expense |
|
|
26 |
|
|
|
22 |
|
|
18 |
% |
OIBDA |
|
$ |
202 |
|
|
$ |
207 |
|
|
-2 |
% |
Restructuring and
impairments |
|
|
95 |
|
|
|
41 |
|
|
— |
% |
Transformation initiatives and
other related costs |
|
|
19 |
|
|
|
14 |
|
|
36 |
% |
Net gain on divestitures |
|
|
(14 |
) |
|
|
— |
|
|
— |
% |
Executive transition
costs |
|
|
— |
|
|
|
3 |
|
|
-100 |
% |
Non-cash stock-based
compensation and other related costs |
|
|
10 |
|
|
|
21 |
|
|
-52 |
% |
Adjusted
OIBDA |
|
$ |
312 |
|
|
$ |
286 |
|
|
9 |
% |
|
|
|
|
|
|
|
Operating income
margin |
|
|
8.0 |
% |
|
|
8.9 |
% |
|
|
Adjusted OIBDA
margin |
|
|
20.9 |
% |
|
|
20.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended March 31, 2024 |
|
For the Six Months Ended March 31, 2023 |
|
% Change |
|
|
(unaudited) |
|
(unaudited) |
|
|
Net income
attributable to Warner Music Group Corp. |
|
$ |
255 |
|
|
$ |
156 |
|
|
63 |
% |
Income attributable to
noncontrolling interest |
|
|
34 |
|
|
|
5 |
|
|
— |
% |
Net
income |
|
$ |
289 |
|
|
$ |
161 |
|
|
80 |
% |
Income tax expense |
|
|
90 |
|
|
|
69 |
|
|
30 |
% |
Income including
income taxes |
|
$ |
379 |
|
|
$ |
230 |
|
|
65 |
% |
Other expense, net |
|
|
13 |
|
|
|
92 |
|
|
-86 |
% |
Interest expense, net |
|
|
81 |
|
|
|
67 |
|
|
21 |
% |
Loss on extinguishment of
debt |
|
|
— |
|
|
|
— |
|
|
— |
% |
Operating
income |
|
$ |
473 |
|
|
$ |
389 |
|
|
22 |
% |
Amortization expense |
|
|
112 |
|
|
|
124 |
|
|
-10 |
% |
Depreciation expense |
|
|
52 |
|
|
|
43 |
|
|
21 |
% |
OIBDA |
|
$ |
637 |
|
|
$ |
556 |
|
|
15 |
% |
Restructuring and
impairments |
|
|
95 |
|
|
|
41 |
|
|
— |
% |
Transformation initiatives and
other related costs |
|
|
38 |
|
|
|
26 |
|
|
46 |
% |
Executive transition
costs |
|
|
— |
|
|
|
3 |
|
|
-100 |
% |
Net gain on divestitures |
|
|
(31 |
) |
|
|
(41 |
) |
|
-24 |
% |
Non-cash stock-based
compensation and other related costs |
|
|
24 |
|
|
|
36 |
|
|
-33 |
% |
Adjusted
OIBDA |
|
$ |
763 |
|
|
$ |
621 |
|
|
23 |
% |
|
|
|
|
|
|
|
Operating income
margin |
|
|
14.6 |
% |
|
|
13.5 |
% |
|
|
Adjusted OIBDA
margin |
|
|
23.5 |
% |
|
|
21.5 |
% |
|
|
Figure 6.
Warner Music Group Corp. – Reconciliation of Segment Operating
Income to Adjusted OIBDA, Three and Six Months Ended March 31, 2024
versus March 31, 2023 |
(dollars
in millions) |
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2024 |
|
For the Three Months Ended March 31, 2023 |
|
% Change |
|
|
(unaudited) |
|
(unaudited) |
|
|
Total WMG operating income – GAAP |
|
$ |
119 |
|
|
$ |
124 |
|
|
-4 |
% |
Depreciation and amortization
expense |
|
|
(83 |
) |
|
|
(83 |
) |
|
— |
% |
Total WMG
OIBDA |
|
$ |
202 |
|
|
$ |
207 |
|
|
-2 |
% |
Restructuring and
impairments |
|
|
95 |
|
|
|
41 |
|
|
— |
% |
Transformation initiatives and
other related costs |
|
|
19 |
|
|
|
14 |
|
|
36 |
% |
Net gain on divestitures |
|
|
(14 |
) |
|
|
— |
|
|
— |
% |
Executive transition
costs |
|
|
— |
|
|
|
3 |
|
|
-100 |
% |
Non-cash stock-based
compensation and other related costs |
|
|
10 |
|
|
|
21 |
|
|
-52 |
% |
Total WMG Adjusted
OIBDA |
|
$ |
312 |
|
|
$ |
286 |
|
|
9 |
% |
Total WMG Adjusted
OIBDA margin |
|
|
20.9 |
% |
|
|
20.4 |
% |
|
|
|
|
|
|
|
|
|
Recorded Music
operating income – GAAP |
|
$ |
134 |
|
|
$ |
151 |
|
|
-11 |
% |
Depreciation and amortization
expense |
|
|
(45 |
) |
|
|
(52 |
) |
|
-13 |
% |
Recorded Music
OIBDA |
|
$ |
179 |
|
|
$ |
203 |
|
|
-12 |
% |
Restructuring and
impairments |
|
$ |
88 |
|
|
$ |
41 |
|
|
— |
% |
Net gain on divestitures |
|
$ |
— |
|
|
$ |
— |
|
|
— |
% |
Non-cash stock-based
compensation and other related costs |
|
$ |
5 |
|
|
$ |
5 |
|
|
— |
% |
Recorded Music
Adjusted OIBDA |
|
$ |
272 |
|
|
$ |
249 |
|
|
9 |
% |
Recorded Music
Adjusted OIBDA margin |
|
|
22.9 |
% |
|
|
21.8 |
% |
|
|
|
|
|
|
|
|
|
Music Publishing
operating income – GAAP |
|
$ |
69 |
|
|
$ |
52 |
|
|
33 |
% |
Depreciation and amortization
expense |
|
|
(26 |
) |
|
|
(23 |
) |
|
13 |
% |
Music Publishing
OIBDA |
|
$ |
95 |
|
|
$ |
75 |
|
|
27 |
% |
Net gain on divestitures |
|
$ |
(14 |
) |
|
$ |
— |
|
|
— |
% |
Non-cash stock-based
compensation and other related costs |
|
$ |
1 |
|
|
$ |
1 |
|
|
— |
% |
Music Publishing
Adjusted OIBDA |
|
$ |
82 |
|
|
$ |
76 |
|
|
8 |
% |
Music Publishing
Adjusted OIBDA margin |
|
|
26.8 |
% |
|
|
29.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended March 31, 2024 |
|
For the Six Months Ended March 31, 2023 |
|
% Change |
|
|
(unaudited) |
|
(unaudited) |
|
|
Total WMG operating
income – GAAP |
|
$ |
473 |
|
|
$ |
389 |
|
|
22 |
% |
Depreciation and amortization
expense |
|
|
(164 |
) |
|
|
(167 |
) |
|
-2 |
% |
Total WMG
OIBDA |
|
$ |
637 |
|
|
$ |
556 |
|
|
15 |
% |
Restructuring and
impairments |
|
|
95 |
|
|
|
41 |
|
|
— |
% |
Transformation initiatives and
other related costs |
|
|
38 |
|
|
|
26 |
|
|
46 |
% |
Executive transition
costs |
|
|
— |
|
|
|
3 |
|
|
-100 |
% |
Net gain on divestitures |
|
|
(31 |
) |
|
|
(41 |
) |
|
-24 |
% |
Non-cash stock-based
compensation and other related costs |
|
|
24 |
|
|
|
36 |
|
|
-33 |
% |
Total WMG Adjusted
OIBDA |
|
$ |
763 |
|
|
$ |
621 |
|
|
23 |
% |
Total WMG Adjusted
OIBDA margin |
|
|
23.5 |
% |
|
|
21.5 |
% |
|
|
|
|
|
|
|
|
|
Recorded Music
operating income – GAAP |
|
$ |
508 |
|
|
$ |
434 |
|
|
17 |
% |
Depreciation and amortization
expense |
|
|
(92 |
) |
|
|
(106 |
) |
|
-13 |
% |
Recorded Music
OIBDA |
|
$ |
600 |
|
|
$ |
540 |
|
|
11 |
% |
Restructuring and
impairment |
|
|
88 |
|
|
|
41 |
|
|
— |
% |
Transformation initiative and
other related costs |
|
|
— |
|
|
|
— |
|
|
— |
% |
Executive transition
costs |
|
|
— |
|
|
|
— |
|
|
— |
% |
Net gain on divestitures |
|
|
(17 |
) |
|
|
(41 |
) |
|
-59 |
% |
Non-cash stock-based
compensation and other related costs |
|
|
13 |
|
|
|
8 |
|
|
63 |
% |
Recorded Music
Adjusted OIBDA |
|
$ |
684 |
|
|
$ |
548 |
|
|
25 |
% |
Recorded Music
Adjusted OIBDA margin |
|
|
26.0 |
% |
|
|
23.0 |
% |
|
|
|
|
|
|
|
|
|
Music Publishing
operating income – GAAP |
|
$ |
132 |
|
|
$ |
101 |
|
|
31 |
% |
Depreciation and amortization
expense |
|
|
(48 |
) |
|
|
(46 |
) |
|
4 |
% |
Music Publishing
OIBDA |
|
$ |
180 |
|
|
$ |
147 |
|
|
22 |
% |
Net gain on divestitures |
|
|
(14 |
) |
|
|
— |
|
|
— |
% |
Non-cash stock-based
compensation and other related costs |
|
|
2 |
|
|
|
1 |
|
|
100 |
% |
Music Publishing
Adjusted OIBDA |
|
$ |
168 |
|
|
$ |
148 |
|
|
14 |
% |
Music Publishing
Adjusted OIBDA margin |
|
|
27.5 |
% |
|
|
29.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant Currency
As exchange rates are an important factor in understanding
period-to-period comparisons, we believe the presentation of
revenue and Adjusted OIBDA on a constant-currency basis in addition
to reported results helps improve the ability to understand our
operating results and evaluate our performance in comparison to
prior periods. Constant-currency information compares revenue and
Adjusted OIBDA between periods as if exchange rates had remained
constant period over period. We use revenue and Adjusted OIBDA on a
constant-currency basis as one measure to evaluate our performance.
We calculate constant-currency by calculating prior-year revenue
and Adjusted OIBDA using current-year foreign currency exchange
rates. Revenue and Adjusted OIBDA on a constant-currency basis
should be considered in addition to, not as a substitute for,
revenue and Adjusted OIBDA reported in accordance with U.S. GAAP.
Revenue and Adjusted OIBDA on a constant-currency basis, as we
present them, may not be comparable to similarly titled measures
used by other companies and are not a measure of performance
presented in accordance with U.S. GAAP.
Figure 7.
Warner Music Group Corp. – Revenue by Geography and Segment,
Three and Six Months Ended March 31, 2024 versus March 31, 2023 As
Reported and Constant Currency |
(dollars
in millions) |
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2024 |
|
For the Three Months Ended March 31, 2023 |
|
For the Three Months Ended March 31, 2023 |
|
% Change |
|
|
As reported |
|
As reported |
|
Constant |
|
Constant |
|
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
U.S. revenue |
|
|
|
|
|
|
|
|
Recorded Music |
|
$ |
508 |
|
|
$ |
522 |
|
|
$ |
522 |
|
|
(3 |
)% |
Music Publishing |
|
|
170 |
|
|
|
135 |
|
|
|
135 |
|
|
26 |
% |
International revenue |
|
|
|
|
|
|
|
|
Recorded Music |
|
|
681 |
|
|
|
621 |
|
|
|
618 |
|
|
10 |
% |
Music Publishing |
|
|
136 |
|
|
|
122 |
|
|
|
123 |
|
|
11 |
% |
Intersegment eliminations |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
|
— |
% |
Total
Revenue |
|
$ |
1,494 |
|
|
$ |
1,399 |
|
|
$ |
1,397 |
|
|
7 |
% |
|
|
|
|
|
|
|
|
|
Revenue by
Segment: |
|
|
|
|
|
|
|
|
Recorded Music |
|
|
|
|
|
|
|
|
Digital |
|
$ |
848 |
|
|
$ |
796 |
|
|
$ |
792 |
|
|
7 |
% |
Physical |
|
|
111 |
|
|
|
118 |
|
|
|
119 |
|
|
(7 |
)% |
Total Digital and Physical |
|
|
959 |
|
|
|
914 |
|
|
|
911 |
|
|
5 |
% |
Artist services and expanded-rights |
|
|
126 |
|
|
|
131 |
|
|
|
130 |
|
|
(3 |
)% |
Licensing |
|
|
104 |
|
|
|
98 |
|
|
|
99 |
|
|
5 |
% |
Total Recorded
Music |
|
|
1,189 |
|
|
|
1,143 |
|
|
|
1,140 |
|
|
4 |
% |
Music Publishing |
|
|
|
|
|
|
|
|
Performance |
|
|
52 |
|
|
|
45 |
|
|
|
44 |
|
|
18 |
% |
Digital |
|
|
187 |
|
|
|
146 |
|
|
|
147 |
|
|
27 |
% |
Mechanical |
|
|
15 |
|
|
|
16 |
|
|
|
16 |
|
|
(6 |
)% |
Synchronization |
|
|
48 |
|
|
|
46 |
|
|
|
47 |
|
|
2 |
% |
Other |
|
|
4 |
|
|
|
4 |
|
|
|
4 |
|
|
— |
% |
Total Music
Publishing |
|
|
306 |
|
|
|
257 |
|
|
|
258 |
|
|
19 |
% |
Intersegment eliminations |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
|
— |
% |
Total
Revenue |
|
$ |
1,494 |
|
|
$ |
1,399 |
|
|
$ |
1,397 |
|
|
7 |
% |
|
|
|
|
|
|
|
|
|
Total Digital
Revenue |
|
$ |
1,035 |
|
|
$ |
942 |
|
|
$ |
939 |
|
|
10 |
% |
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended March 31, 2024 |
|
For the Six Months Ended March 31, 2023 |
|
For the Six Months Ended March 31, 2023 |
|
% Change |
|
|
As reported |
|
As reported |
|
Constant |
|
Constant |
|
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
U.S. revenue |
|
|
|
|
|
|
|
|
Recorded Music |
|
$ |
1,135 |
|
|
$ |
1,061 |
|
|
$ |
1,061 |
|
|
7 |
% |
Music Publishing |
|
|
342 |
|
|
|
268 |
|
|
|
268 |
|
|
28 |
% |
International revenue |
|
|
|
|
|
|
|
|
Recorded Music |
|
|
1,499 |
|
|
|
1,321 |
|
|
|
1,334 |
|
|
12 |
% |
Music Publishing |
|
|
268 |
|
|
|
239 |
|
|
|
244 |
|
|
10 |
% |
Intersegment eliminations |
|
|
(2 |
) |
|
|
(2 |
) |
|
|
(2 |
) |
|
— |
% |
Total
Revenue |
|
$ |
3,242 |
|
|
$ |
2,887 |
|
|
$ |
2,905 |
|
|
12 |
% |
|
|
|
|
|
|
|
|
|
Revenue by
Segment: |
|
|
|
|
|
|
|
|
Recorded Music |
|
|
|
|
|
|
|
|
Digital |
|
$ |
1,756 |
|
|
$ |
1,599 |
|
|
$ |
1,600 |
|
|
10 |
% |
Physical |
|
|
265 |
|
|
|
251 |
|
|
|
255 |
|
|
4 |
% |
Total Digital and Physical |
|
$ |
2,021 |
|
|
$ |
1,850 |
|
|
$ |
1,855 |
|
|
9 |
% |
Artist services and expanded-rights |
|
|
330 |
|
|
|
337 |
|
|
|
342 |
|
|
(4 |
)% |
Licensing |
|
|
283 |
|
|
|
195 |
|
|
|
198 |
|
|
43 |
% |
Total Recorded
Music |
|
$ |
2,634 |
|
|
$ |
2,382 |
|
|
$ |
2,395 |
|
|
10 |
% |
Music Publishing |
|
|
|
|
|
|
|
|
Performance |
|
$ |
103 |
|
|
$ |
90 |
|
|
$ |
90 |
|
|
14 |
% |
Digital |
|
|
383 |
|
|
|
295 |
|
|
|
298 |
|
|
29 |
% |
Mechanical |
|
|
30 |
|
|
|
30 |
|
|
|
31 |
|
|
(3 |
)% |
Synchronization |
|
|
87 |
|
|
|
85 |
|
|
|
86 |
|
|
1 |
% |
Other |
|
|
7 |
|
|
|
7 |
|
|
|
7 |
|
|
— |
% |
Total Music
Publishing |
|
$ |
610 |
|
|
$ |
507 |
|
|
$ |
512 |
|
|
19 |
% |
Intersegment eliminations |
|
|
(2 |
) |
|
|
(2 |
) |
|
|
(2 |
) |
|
— |
% |
Total
Revenue |
|
$ |
3,242 |
|
|
$ |
2,887 |
|
|
$ |
2,905 |
|
|
12 |
% |
|
|
|
|
|
|
|
|
|
Total Digital
Revenue |
|
$ |
2,139 |
|
|
$ |
1,894 |
|
|
$ |
1,898 |
|
|
13 |
% |
Figure 8.
Warner Music Group Corp. – Adjusted OIBDA by Segment, Three
and Six Months Ended March 31, 2024 versus March 31, 2023 As
Reported and Constant Currency |
(dollars
in millions) |
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2024 |
|
For the Three Months Ended March 31, 2023 |
|
For the Three Months Ended March 31, 2023 |
|
Change % |
|
|
As reported |
|
As reported |
|
Constant |
|
Constant |
|
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
Total WMG Adjusted OIBDA |
|
$ |
312 |
|
|
$ |
286 |
|
|
$ |
286 |
|
|
9.1 |
% |
Adjusted OIBDA margin |
|
|
20.9 |
% |
|
|
20.4 |
% |
|
|
20.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
Recorded Music Adjusted
OIBDA |
|
$ |
272 |
|
|
$ |
249 |
|
|
$ |
249 |
|
|
9.2 |
% |
Recorded Music Adjusted OIBDA
margin |
|
|
22.9 |
% |
|
|
21.8 |
% |
|
|
21.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
Music Publishing Adjusted
OIBDA |
|
$ |
82 |
|
|
$ |
76 |
|
|
$ |
76 |
|
|
7.9 |
% |
Music Publishing Adjusted
OIBDA margin |
|
|
26.8 |
% |
|
|
29.6 |
% |
|
|
29.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended March 31, 2024 |
|
For the Six Months Ended March 31, 2023 |
|
For the Six Months Ended March 31, 2023 |
|
Change % |
|
|
As reported |
|
As reported |
|
Constant |
|
Constant |
|
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
Total WMG Adjusted OIBDA |
|
$ |
763 |
|
|
$ |
621 |
|
|
$ |
625 |
|
|
22.1 |
% |
Adjusted OIBDA margin |
|
|
23.5 |
% |
|
|
21.5 |
% |
|
|
21.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
Recorded Music Adjusted
OIBDA |
|
$ |
684 |
|
|
$ |
548 |
|
|
$ |
551 |
|
|
24.1 |
% |
Recorded Music Adjusted OIBDA
margin |
|
|
26.0 |
% |
|
|
23.0 |
% |
|
|
23.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
Music Publishing Adjusted
OIBDA |
|
$ |
168 |
|
|
$ |
148 |
|
|
$ |
149 |
|
|
12.8 |
% |
Music Publishing Adjusted
OIBDA margin |
|
|
27.5 |
% |
|
|
29.2 |
% |
|
|
29.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
Our definition of Free Cash Flow is defined as cash flow
provided by operating activities less capital expenditures. We use
Free Cash Flow, among other measures, to evaluate our operating
performance. Management believes Free Cash Flow provides investors
with an important perspective on the cash available to fund our
debt service requirements, ongoing working capital requirements,
capital expenditure requirements, strategic acquisitions and
investments, and any dividends, prepayments of debt or repurchases
or retirement of our outstanding debt or notes in open market
purchases, privately negotiated purchases, any repurchases of our
common stock or otherwise. As a result, Free Cash Flow is a
significant measure of our ability to generate long-term value. It
is useful for investors to know whether this ability is being
enhanced or degraded as a result of our operating performance. We
believe the presentation of Free Cash Flow is relevant and useful
for investors because it allows investors to view performance in a
manner similar to the method management uses.
Free Cash Flow is not a measure of performance calculated in
accordance with U.S. GAAP and therefore it should not be considered
in isolation of, or as a substitute for, net income (loss) as an
indicator of operating performance or cash flow provided by
operating activities as a measure of liquidity. Free Cash Flow, as
we calculate it, may not be comparable to similarly titled measures
employed by other companies. In addition, Free Cash Flow does not
necessarily represent funds available for discretionary use and is
not necessarily a measure of our ability to fund our cash needs.
Because Free Cash Flow deducts capital expenditures from “net cash
provided by operating activities” (the most directly comparable
U.S. GAAP financial measure), users of this information should
consider the types of events and transactions that are not
reflected. We provide below a reconciliation of Free Cash Flow to
the most directly comparable amount reported under U.S. GAAP, which
is “net cash provided by operating activities.”
Figure 9.
Warner Music Group Corp. – Calculation of Free Cash Flow,
Three and Six Months Ended March 31, 2024 versus March 31,
2023 |
(dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2024 |
|
For the Three Months Ended March 31, 2023 |
|
|
(unaudited) |
|
(unaudited) |
Net cash used in operating activities |
|
$ |
(31 |
) |
|
$ |
(6 |
) |
Less: Capital
expenditures |
|
|
26 |
|
|
|
35 |
|
|
|
|
|
|
Free Cash
Flow |
|
$ |
(57 |
) |
|
$ |
(41 |
) |
|
|
|
|
|
|
|
For the Six Months Ended March 31, 2024 |
|
For the Six Months Ended March 31, 2023 |
|
|
(unaudited) |
|
(unaudited) |
Net cash provided by
operating activities |
|
$ |
262 |
|
|
$ |
203 |
|
Less: Capital
expenditures |
|
|
55 |
|
|
|
56 |
|
|
|
|
|
|
Free Cash
Flow |
|
$ |
207 |
|
|
$ |
147 |
|
______________________________________
|
|
Media Contact: |
Investor Contact: |
James
Steven |
Kareem Chin |
(212)
275-2213 |
|
James.Steven@wmg.com |
Investor.Relations@wmg.com |
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