Warner Music Group Corp. Reports Results for Fiscal First Quarter Ended December 31, 2023
- Double-digit growth in revenue and adjusted OIBDA
- Recorded music and music publishing delivered the highest quarterly revenue in company history
- Total revenue increased 17%
- Net income was $193 million
- Operating income increased 34% to $354 million
- Robust operating cash flow conversion of 65% of adjusted OIBDA
- Launched plan to achieve $200 million in annual savings to be reinvested into growth opportunities
- None.
Insights
The reported revenue growth of 17% and the Adjusted OIBDA increase of 35% for Warner Music Group Corp. represent significant financial milestones, indicating a robust expansion in the company's core businesses of Recorded Music and Music Publishing. The financial performance is a testament to the company's strategic initiatives, including the emphasis on streaming services and operational efficiencies. The operating cash flow conversion rate of 65% of Adjusted OIBDA underscores a healthy liquidity position, which is crucial for meeting short-term obligations and funding growth opportunities.
From an investment perspective, the company's plan to achieve $200 million in annual savings to reinvest into growth opportunities suggests a proactive approach to cost management and a commitment to driving long-term shareholder value. This plan, coupled with the highest quarterly revenue in company history, may positively influence investor sentiment and could be reflected in the company's stock performance.
However, it is important to consider the one-time impacts such as the licensing agreement extension and the renewal with a digital partner, which contributed to the revenue surge. These factors may not be indicative of sustainable growth and should be carefully evaluated when projecting future performance.
The acceleration in Recorded Music streaming growth and the fifth consecutive quarter of increasing Music Publishing revenue growth reflect broader industry trends, where digital consumption continues to drive revenue. The reported 16.6% increase in streaming revenue aligns with consumer behavior shifts towards subscription and ad-supported streaming services. The company's ability to capitalize on these trends through strategic partnerships and licensing deals is a strong indicator of its market adaptability and potential for continued revenue growth in a highly competitive industry.
Furthermore, the resilience of the physical revenue segment, with a 15.8% increase, is noteworthy in an era where digital is dominant. This may point to a diversified revenue stream and a strong brand presence, which can mitigate risks associated with digital market volatility. Investors should monitor the company's ability to maintain a balanced portfolio of digital and physical sales, as this could be a critical factor in long-term financial stability.
The reported financial results of Warner Music Group Corp. reflect a macroeconomic environment where entertainment consumption, especially digital media, remains strong despite potential economic headwinds. The company's growth in constant currency terms is particularly relevant, as it indicates that the underlying business performance is solid even when discounting the effects of currency fluctuations. This is a positive signal for the company's resilience in the face of potential exchange rate volatility.
The impact of exchange rates on the company's Euro-denominated debt and the subsequent reduction in losses compared to the prior-year quarter demonstrate the importance of currency risk management in multinational corporations. Investors should consider the company's exposure to such risks and its strategies for hedging against adverse currency movements when evaluating its long-term financial health.
Additionally, the company's focus on high-return opportunities and creating efficiencies across its business suggests a strategic alignment with economic principles of resource allocation and productivity enhancement. These strategies could potentially lead to improved profit margins and a more robust competitive position in the global music industry.
Financial Highlights
- Double-Digit Growth in Revenue and Adjusted OIBDA as both Recorded Music and Music Publishing Deliver Highest Quarterly Revenue in Company History
- Recorded Music Results Bolstered by an Acceleration in Subscription and Ad-Supported Streaming
- Music Publishing Momentum Continues with Fifth Consecutive Quarter of Increasing Revenue Growth
- Robust Operating Cash Flow Conversion of
65% of Adjusted OIBDA - Launched Plan to Achieve
$200 million in Annual Savings to be Reinvested into Growth Opportunities
For the three months ended December 31, 2023
- Total revenue increased
17% , or16% in constant currency - Net income was
$193 million versus$124 million in the prior-year quarter - Operating income increased
34% to$354 million versus$265 million in the prior-year quarter - Adjusted OIBDA increased
35% to$451 million versus$335 million in the prior-year quarter or33% in constant currency - Cash provided by operating activities increased
40% to$293 million versus$209 million in the prior-year quarter
NEW YORK, Feb. 07, 2024 (GLOBE NEWSWIRE) -- Warner Music Group Corp. today announced its first-quarter financial results for the period ended December 31, 2023.
"These results reflect the impact of our chart-topping artists, hit-making songwriters, iconic catalog, and laser focus on execution by all our teams," said Robert Kyncl, CEO, Warner Music Group. "As we deliver our plan to accelerate our growth, we are becoming more efficient, increasing operating leverage, and freeing up more funds to invest in music and tech, which in turn will drive further sustainable growth."
"Our strong Q1 results reflect double-digit revenue and Adjusted OIBDA growth, as well as robust operating cash flow conversion," said Bryan Castellani, CFO, Warner Music Group. "The strength and resilience of our business was highlighted by an acceleration in Recorded Music streaming growth and continued momentum in Music Publishing, which saw its fifth consecutive quarter of increasing revenue growth. With a healthy and growing music ecosystem as our backdrop, we’re intensifying our focus on the highest-return opportunities while creating efficiencies across our business.”
Total WMG
| Total WMG Summary Results | |||||||
| (dollars in millions) | |||||||
| For the Three Months Ended December 31, 2023 | For the Three Months Ended December 31, 2022 | % Change | |||||
| (unaudited) | (unaudited) | ||||||
| Revenue | $ | 1,748 | $ | 1,488 | |||
| Recorded Music revenue | 1,445 | 1,239 | |||||
| Music Publishing revenue | 304 | 250 | |||||
| Operating income | 354 | 265 | |||||
| Adjusted OIBDA(1) | 451 | 335 | |||||
| Net income | 193 | 124 | |||||
| Net cash provided by operating activities | 293 | 209 | |||||
| Free Cash Flow | 264 | 188 | |||||
| (1) See "Supplemental Disclosures Regarding Non-GAAP Financial Measures" at the end of this release for details regarding this measure. | |||||||
Revenue was up
Digital revenue increased
Operating income increased
Adjusted OIBDA increased
Net income was
Basic and Diluted earnings per share were
As of December 31, 2023, the Company reported a cash balance of
Cash provided by operating activities increased
Recorded Music
| Recorded Music Summary Results | |||||||
| (dollars in millions) | |||||||
| For the Three Months Ended December 31, 2023 | For the Three Months Ended December 31, 2022 | % Change | |||||
| (unaudited) | (unaudited) | ||||||
| Revenue | $ | 1,445 | $ | 1,239 | |||
| Operating income | 374 | 283 | |||||
| Adjusted OIBDA(1) | 412 | 299 | |||||
| (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 December 31, 2023 | For the Three Months Ended December 31, 2022 | For the Three Months Ended December 31, 2022 | ||||||
| As reported | As reported | Constant | ||||||
| (unaudited) | (unaudited) | (unaudited) | ||||||
| Digital | $ | 908 | $ | 803 | $ | 808 | ||
| Physical | 154 | 133 | 136 | |||||
| Total Digital and Physical | 1,062 | 936 | 944 | |||||
| Artist services and expanded-rights | 204 | 206 | 212 | |||||
| Licensing | 179 | 97 | 99 | |||||
| Total Recorded Music | $ | 1,445 | $ | 1,239 | $ | 1,255 | ||
Recorded Music revenue was up
Recorded Music operating income was
Adjusted OIBDA increased
Music Publishing
| Music Publishing Summary Results | |||||||
| (dollars in millions) | |||||||
| For the Three Months Ended December 31, 2023 | For the Three Months Ended December 31, 2022 | % Change | |||||
| (unaudited) | (unaudited) | ||||||
| Revenue | $ | 304 | $ | 250 | |||
| Operating income | 63 | 49 | |||||
| Adjusted OIBDA(1) | 86 | 72 | |||||
| (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 December 31, 2023 | For the Three Months Ended December 31, 2022 | For the Three Months Ended December 31, 2022 | ||||||
| As reported | As reported | Constant | ||||||
| (unaudited) | (unaudited) | (unaudited) | ||||||
| Performance | $ | 51 | $ | 45 | $ | 46 | ||
| Digital | 196 | 149 | 151 | |||||
| Mechanical | 15 | 14 | 15 | |||||
| Synchronization | 39 | 39 | 39 | |||||
| Other | 3 | 3 | 3 | |||||
| Total Music Publishing | $ | 304 | $ | 250 | $ | 254 | ||
Music Publishing revenue increased
Music Publishing operating income was
Music Publishing Adjusted OIBDA increased
Financial details for the quarter can be found in the Company’s current Quarterly Report on Form 10-Q for the period ended December 31, 2023, which will be filed tomorrow morning, February 8, 2024, with the Securities and Exchange Commission.
Tomorrow morning, February 8, 2024, 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.
Basis of Presentation
Effective for the 2023 fiscal year, the Company’s fiscal year was modified from a 52-53-week calendar, in which reporting periods ended on the last Friday of the calendar quarter, to a reporting calendar in which the reporting periods end on the last day of the calendar quarter. The Company’s fiscal year now begins on October 1 and ends on September 30 each year.
| Figure 1. Warner Music Group Corp. - Condensed Consolidated Statements of Operations, Three Months Ended December 31, 2023 versus December 31, 2022 | |||||||||
| (dollars in millions) | |||||||||
| For the Three Months Ended December 31, 2023 | For the Three Months Ended December 31, 2022 | % Change | |||||||
| (unaudited) | (unaudited) | ||||||||
| Revenue | $ | 1,748 | $ | 1,488 | 17% | ||||
| Cost and expenses: | |||||||||
| Cost of revenue | (880 | ) | (761 | ) | |||||
| Selling, general and administrative expenses | (476 | ) | (440 | ) | |||||
| Amortization expense | (55 | ) | (63 | ) | - | ||||
| Total costs and expenses | $ | (1,411 | ) | $ | (1,264 | ) | 12% | ||
| Net gain on divestiture | 17 | 41 | - | ||||||
| Operating income | $ | 354 | $ | 265 | 34% | ||||
| Interest expense, net | (39 | ) | (32 | ) | |||||
| Other expense, net | (50 | ) | (61 | ) | - | ||||
| Income before income taxes | $ | 265 | $ | 172 | 54% | ||||
| Income tax expense | (72 | ) | (48 | ) | |||||
| Net income | $ | 193 | $ | 124 | 56% | ||||
| Less: Income attributable to noncontrolling interest | (34 | ) | (2 | ) | —% | ||||
| Net income attributable to Warner Music Group Corp. | $ | 159 | $ | 122 | 30% | ||||
| Net income per share attributable to common stockholders: | |||||||||
| Class A – Basic and Diluted | $ | 0.30 | $ | 0.23 | |||||
| Class B – Basic and Diluted | $ | 0.30 | $ | 0.23 | |||||
| Figure 2. Warner Music Group Corp. - Condensed Consolidated Balance Sheets at December 31, 2023 versus September 30, 2023 | ||||||||||
| (dollars in millions) | ||||||||||
| December 31, 2023 | September 30, 2023 | % Change | ||||||||
| (unaudited) | ||||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and equivalents | $ | 754 | $ | 641 | 18 | % | ||||
| Accounts receivable, net | 1,195 | 1,120 | 7 | % | ||||||
| Inventories | 106 | 126 | -16 | % | ||||||
| Royalty advances expected to be recouped within one year | 453 | 413 | 10 | % | ||||||
| Prepaid and other current assets | 108 | 102 | 6 | % | ||||||
| Total current assets | $ | 2,616 | $ | 2,402 | 9 | % | ||||
| Royalty advances expected to be recouped after one year | 755 | 688 | 10 | % | ||||||
| Property, plant and equipment, net | 466 | 458 | 2 | % | ||||||
| Operating lease right-of-use assets, net | 242 | 245 | -1 | % | ||||||
| Goodwill | 2,015 | 1,993 | 1 | % | ||||||
| Intangible assets subject to amortization, net | 2,390 | 2,353 | 2 | % | ||||||
| Intangible assets not subject to amortization | 151 | 149 | 1 | % | ||||||
| Deferred tax assets, net | 31 | 32 | -3 | % | ||||||
| Other assets | 325 | 225 | 44 | % | ||||||
| Total assets | $ | 8,991 | $ | 8,545 | 5 | % | ||||
| Liabilities and Equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 246 | $ | 300 | -18 | % | ||||
| Accrued royalties | 2,460 | 2,219 | 11 | % | ||||||
| Accrued liabilities | 538 | 533 | 1 | % | ||||||
| Accrued interest | 29 | 18 | 61 | % | ||||||
| Operating lease liabilities, current | 43 | 41 | 5 | % | ||||||
| Deferred revenue | 305 | 371 | -18 | % | ||||||
| Other current liabilities | 124 | 57 | — | % | ||||||
| Total current liabilities | $ | 3,745 | $ | 3,539 | 6 | % | ||||
| Long-term debt | 4,004 | 3,964 | 1 | % | ||||||
| Operating lease liabilities, noncurrent | 249 | 255 | -2 | % | ||||||
| Deferred tax liabilities, net | 223 | 216 | 3 | % | ||||||
| Other noncurrent liabilities | 154 | 141 | 9 | % | ||||||
| Total liabilities | $ | 8,375 | $ | 8,115 | 3 | % | ||||
| Equity: | ||||||||||
| Class A common stock | $ | — | $ | — | — | % | ||||
| Class B common stock | 1 | 1 | — | % | ||||||
| Additional paid-in capital | 2,039 | 2,015 | 1 | % | ||||||
| Accumulated deficit | (1,317 | ) | (1,387 | ) | -5 | % | ||||
| Accumulated other comprehensive loss, net | (260 | ) | (322 | ) | -19 | % | ||||
| Total Warner Music Group Corp. equity | $ | 463 | $ | 307 | 51 | % | ||||
| Noncontrolling interest | 153 | 123 | 24 | % | ||||||
| Total equity | 616 | 430 | 43 | % | ||||||
| Total liabilities and equity | $ | 8,991 | $ | 8,545 | 5 | % | ||||
| Figure 3. Warner Music Group Corp. - Summarized Statements of Cash Flows, Three Months Ended December 31, 2023 versus December 31, 2022 | |||||||
| (dollars in millions) | |||||||
| For the Three Months Ended December 31, 2023 | For the Three Months Ended December 31, 2022 | ||||||
| (unaudited) | (unaudited) | ||||||
| Net cash provided by operating activities | $ | 293 | $ | 209 | |||
| Net cash used in investing activities | (92 | ) | (10 | ) | |||
| Net cash used in financing activities | (93 | ) | (70 | ) | |||
| Effect of foreign currency exchange rates on cash and equivalents | 5 | 7 | |||||
| Net increase in cash and equivalents | $ | 113 | $ | 136 | |||
| Figure 4. Warner Music Group Corp. - Digital Revenue Summary, Three Months Ended December 31, 2023 versus December 31, 2022 | |||||||
| (dollars in millions) | |||||||
| For the Three Months Ended December 31, 2023 | For the Three Months Ended December 31, 2022 | % Change | |||||
| (unaudited) | (unaudited) | ||||||
| Recorded Music | |||||||
| Subscription | $ | 644 | $ | 559 | |||
| Ad-Supported | 243 | 221 | |||||
| Streaming | $ | 887 | $ | 780 | |||
| Downloads and Other Digital | 21 | 23 | - | ||||
| Total Recorded Music Digital Revenue | $ | 908 | $ | 803 | 13% | ||
| Music Publishing | |||||||
| Streaming | $ | 193 | $ | 146 | |||
| Downloads and Other Digital | 3 | 3 | —% | ||||
| Total Music Publishing Digital Revenue | $ | 196 | $ | 149 | 32% | ||
| Consolidated | |||||||
| Streaming | $ | 1,080 | $ | 926 | |||
| Downloads and Other Digital | 24 | 26 | - | ||||
| Intersegment Eliminations | — | — | —% | ||||
| Total Digital Revenue | $ | 1,104 | $ | 952 | 16% | ||
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 Months Ended December 31, 2023 versus December 31, 2022 | |||||||||
| (dollars in millions) | |||||||||
| For the Three Months Ended December 31, 2023 | For the Three Months Ended December 31, 2022 | % Change | |||||||
| (unaudited) | (unaudited) | ||||||||
| Net income attributable to Warner Music Group Corp. | $ | 159 | $ | 122 | 30% | ||||
| Income attributable to noncontrolling interest | 34 | 2 | —% | ||||||
| Net income | $ | 193 | $ | 124 | 56% | ||||
| Income tax expense | 72 | 48 | |||||||
| Income including income taxes | $ | 265 | $ | 172 | 54% | ||||
| Other expense, net | 50 | 61 | - | ||||||
| Interest expense, net | 39 | 32 | |||||||
| Operating income | $ | 354 | $ | 265 | 34% | ||||
| Amortization expense | 55 | 63 | - | ||||||
| Depreciation expense | 26 | 21 | |||||||
| OIBDA | $ | 435 | $ | 349 | 25% | ||||
| Transformation initiatives and other related costs | 19 | 12 | |||||||
| Gain on divestitures | (17 | ) | (41 | ) | - | ||||
| Non-cash stock-based compensation and other related costs | 14 | 15 | - | ||||||
| Adjusted OIBDA | $ | 451 | $ | 335 | 35% | ||||
| Operating income margin | 20.3 | % | 17.8 | % | |||||
| Adjusted OIBDA margin | 25.8 | % | 22.5 | % | |||||
| Figure 6. Warner Music Group Corp. - Reconciliation of Segment Operating Income to Adjusted OIBDA, Three Months Ended December 31, 2023 versus December 31, 2022 | |||||||||
| (dollars in millions) | |||||||||
| For the Three Months Ended December 31, 2023 | For the Three Months Ended December 31, 2022 | % Change | |||||||
| (unaudited) | (unaudited) | ||||||||
| Total WMG operating income – GAAP | $ | 354 | $ | 265 | 34% | ||||
| Depreciation and amortization expense | (81 | ) | (84 | ) | - | ||||
| Total WMG OIBDA | $ | 435 | $ | 349 | 25% | ||||
| Transformation initiatives and other related costs | 19 | 12 | |||||||
| Gain on divestitures | (17 | ) | (41 | ) | - | ||||
| Non-cash stock-based compensation and other related costs | 14 | 15 | - | ||||||
| Total WMG Adjusted OIBDA | $ | 451 | $ | 335 | 35% | ||||
| Total WMG Adjusted OIBDA margin | 25.8 | % | 22.5 | % | |||||
| Recorded Music operating income – GAAP | $ | 374 | $ | 283 | 32% | ||||
| Depreciation and amortization expense | (47 | ) | (54 | ) | - | ||||
| Recorded Music OIBDA | $ | 421 | $ | 337 | 25% | ||||
| Gain on divestitures | $ | (17 | ) | $ | (41 | ) | - | ||
| Non-cash stock-based compensation and other related costs | $ | 8 | $ | 3 | —% | ||||
| Recorded Music Adjusted OIBDA | $ | 412 | $ | 299 | 38% | ||||
| Recorded Music Adjusted OIBDA margin | 28.5 | % | 24.1 | % | |||||
| Music Publishing operating income – GAAP | $ | 63 | $ | 49 | 29% | ||||
| Depreciation and amortization expense | (22 | ) | (23 | ) | - | ||||
| Music Publishing OIBDA | $ | 85 | $ | 72 | 18% | ||||
| Non-cash stock-based compensation and other related costs | $ | 1 | $ | — | —% | ||||
| Music Publishing Adjusted OIBDA | $ | 86 | $ | 72 | 19% | ||||
| Music Publishing Adjusted OIBDA margin | 28.3 | % | 28.8 | % | |||||
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 Months Ended December 31, 2023 versus December 31, 2022 As Reported and Constant Currency | |||||||||||||
| (dollars in millions) | |||||||||||||
| For the Three Months Ended December 31, 2023 | For the Three Months Ended December 31, 2022 | For the Three Months Ended December 31, 2022 | % Change | ||||||||||
| As reported | As reported | Constant | Constant | ||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||
| U.S. revenue | |||||||||||||
| Recorded Music | $ | 627 | $ | 539 | $ | 539 | |||||||
| Music Publishing | 172 | 133 | 133 | ||||||||||
| International revenue | |||||||||||||
| Recorded Music | 818 | 700 | 716 | ||||||||||
| Music Publishing | 132 | 117 | 121 | ||||||||||
| Intersegment eliminations | (1 | ) | (1 | ) | (1 | ) | —% | ||||||
| Total Revenue | $ | 1,748 | $ | 1,488 | $ | 1,508 | 16% | ||||||
| Revenue by Segment: | |||||||||||||
| Recorded Music | |||||||||||||
| Digital | $ | 908 | $ | 803 | $ | 808 | |||||||
| Physical | 154 | 133 | 136 | ||||||||||
| Total Digital and Physical | 1,062 | 936 | 944 | ||||||||||
| Artist services and expanded-rights | 204 | 206 | 212 | (4)% | |||||||||
| Licensing | 179 | 97 | 99 | ||||||||||
| Total Recorded Music | 1,445 | 1,239 | 1,255 | 15% | |||||||||
| Music Publishing | |||||||||||||
| Performance | 51 | 45 | 46 | ||||||||||
| Digital | 196 | 149 | 151 | ||||||||||
| Mechanical | 15 | 14 | 15 | —% | |||||||||
| Synchronization | 39 | 39 | 39 | —% | |||||||||
| Other | 3 | 3 | 3 | —% | |||||||||
| Total Music Publishing | 304 | 250 | 254 | 20% | |||||||||
| Intersegment eliminations | (1 | ) | (1 | ) | (1 | ) | —% | ||||||
| Total Revenue | $ | 1,748 | $ | 1,488 | $ | 1,508 | 16% | ||||||
| Total Digital Revenue | $ | 1,104 | $ | 952 | $ | 959 | 15% | ||||||
| Figure 8. Warner Music Group Corp. - Adjusted OIBDA by Segment, Three Months Ended December 31, 2023 versus December 31, 2022 As Reported and Constant Currency | |||||||||||||
| (dollars in millions) | |||||||||||||
| For the Three Months Ended December 31, 2023 | For the Three Months Ended December 31, 2022 | For the Three Months Ended December 31, 2022 | Change % | ||||||||||
| As reported | As reported | Constant | Constant | ||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||
| Total WMG Adjusted OIBDA | $ | 451 | $ | 335 | $ | 339 | |||||||
| Adjusted OIBDA margin | 25.8 | % | 22.5 | % | 22.5 | % | |||||||
| Recorded Music Adjusted OIBDA | $ | 412 | $ | 299 | $ | 302 | |||||||
| Recorded Music Adjusted OIBDA margin | 28.5 | % | 24.1 | % | 24.1 | % | |||||||
| Music Publishing Adjusted OIBDA | $ | 86 | $ | 72 | $ | 73 | |||||||
| Music Publishing Adjusted OIBDA margin | 28.3 | % | 28.8 | % | 28.7 | % | |||||||
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 Months Ended December 31, 2023 versus December 31, 2022 | |||||
| (dollars in millions) | |||||
| For the Three Months Ended December 31, 2023 | For the Three Months Ended December 31, 2022 | ||||
| (unaudited) | (unaudited) | ||||
| Net cash provided by operating activities | $ | 293 | $ | 209 | |
| Less: Capital expenditures | 29 | 21 | |||
| Free Cash Flow | $ | 264 | $ | 188 | |
______________________________________
| Media Contact: | Investor Contact: |
| James Steven | Kareem Chin |
| (212) 275-2213 | |
| James.Steven@wmg.com | Investor.Relations@wmg.com |
FAQ
What is the total revenue increase percentage for Warner Music Group Corp.?
What was the net income reported by Warner Music Group Corp.?
What was the operating income increase percentage for Warner Music Group Corp.?
What is the plan launched by Warner Music Group Corp. to achieve annual savings?
When will Warner Music Group Corp. be hosting a conference call to discuss the results?
