Warner Music Group Rides Strong Subscription Growth to Hit $6 Billion Revenue Target
Digital and streaming revenues drive overall revenue growth.
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Warner Music Group reported on Thursday that total revenue for its fiscal year rose 6% compared to a year-ago on strong digital and streaming subscription revenue.
The company reported $6.43 billion in total revenue for the twelve months ending on Sept. 30, up from the roughly $6 billion the company generated in the 12-months prior. That figure included $5.22 billion in recorded music revenue, which represented a 5% increase from a year ago, and music publishing revenue of $1.2 billion, which was up by 11% increase from a year ago.
WMG’s digital revenues grew by 7.3% and streaming revenue increased 8.2% in a year despite the roll-off of a distribution deal with BMG, which negatively impacted both digital and streaming revenues within recorded music. Subscription streaming revenue rose 8% to $2.5 billion for the year.
Music publishing streaming revenue jumped 14.6%, as both divisions benefitted from licensing, physical sales, performance and sync revenues, the company said. Overall, publishing revenue rose 11% on the year to $1.2 billion.
Operating income rose by $33 million to $823 million, primarily due to lower amortization expenses and restructuring charges. Net income increased by $39 million to $478 million, aided by lower income tax expenses and other factors. Basic and diluted earnings per share were $0.83. Cash provided by operating activities increased by 10% to $754 million, while free cash flow rose by 14% to $638 million.
“Our strong streaming performance, underpinned by positive industry trends, and combined with our cost discipline, resulted in robust cash flow generation,” Bryan Castellani, CFO of Warner Music Group, said in a statement. We are excited by the opportunities ahead, and look forward to delivering more culture-shaping music in 2025 and beyond.”
Key WMG financial highlights for its full fiscal year:
- Total revenue rose 6% to $6.426 billion for the fiscal year, from $6.037 billion in 2023.
- Net profit, or net income, was up 9% at $478 million compared to $439 million.
- Recorded revenue rose 5% to $5.223 billion from $4.995 billion.
- Publishing revenue rose 11% to $1.210 billion from $1.08 billion.
- Digital revenue was up 7.3% $4.280 billion from $3.9 billion in 2023.
- Recorded music subscription streaming revenue rose 8% to $2.543 billion from $2.349 billion (ad-supported increased 3%).
- Operating income was up 4% to $823 million from $790 million, so that means operating margin was down slightly to 12.8% compared to the prior year when it was 13.1% of revenue.
As for WMG’s fiscal fourth quarter, which also ended Sept. 30, the No. 3 major felt the sting of the BMG termination, which they say resulted in $25 million less digital revenue, but still rode a solid slate of releases from Benson Boone, Zach Bryan, Charli XCX and others to boost total revenue by 3% to $1.6 billion.
WMG said its recorded music segment accounted for $1.338 billion of that $1.6 billion quarterly haul, a 3.6% improvement.
Digital revenue slightly decreased by 0.2% in Q4, while streaming revenue rose by 1.0%. Adjusted for the BMG termination and a digital license renewal, recorded music streaming revenue increased by 5.6%. Recorded music subscription streaming revenue rose 5% to $645 million from $615 million, though ad-supported subscription revenue dipped 5%.
Music Publishing streaming revenue decreased by 4.2%, but adjusted for the prior-year benefit, it was up 5.2%. Revenue growth was driven by increases in recorded music licensing, physical sales, artist services and synchronization revenue, offset by lower mechanical revenue. WMG said music publishing digital revenue growth was affected by a prior-year benefit from a Copyright Royalty Board ruling, which added $17 million last year.
Operating income fell to $143 million from $212 million, impacted by restructuring charges, higher stock-based compensation and other expenses. Net income dropped by $106 million to $48 million, due to higher interest expenses and exchange rate impacts, partially offset by lower tax expenses.
The company reported a cash balance of $694 million and total debt of $4.014 billion. Cash provided by operating activities decreased by 10% to $304 million, and capital expenditures fell to $33 million. Free Cash Flow also decreased by 10% to $271 million.
Key WMG financial highlights for its Q4:
- Total revenue rose 2.8% to $1.630 billion for the fourth quarter 2024, from $1.586 billion in the same quarter 2023.
- Net income was down 69% at $48 million this quarter compared to $154 million.
- Digital revenue decreased 0.2%to $1.066 billion from $1.068 billion.
- Streaming revenue for both recorded music and publishing rose 1% to $1.048 billion from $1.038 billion.
- Recorded music subscription streaming revenue rose 5% to $645 million from $615 million (ad-supported dipped 5%).
- Recorded music revenue rose 3.6% to $1.338 billion from $1.291 billion.
- Publishing revenue dipped 1% to $295 million from $298 million.
- Operating income was down 33% to $143 million from $212 million.
- OIBDA was down 22% to $226 million compared to $291 million.
Warner’s stock was up 2.25% in pre-market trading at 8:04 a.m. in New York.
