Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Warner Music Group Corp (WMG, Financial) reported a 1% increase in total revenue, with recorded music revenue growing by 1% and music publishing revenue by 3%.
- The company has a strong presence on global charts, with significant success in Spotify Global 200 and Billboard charts, indicating effective A&R investments.
- WMG is expanding its market share in high-growth regions such as MENA, Nigeria, and India, where monetization is shifting towards paid streaming.
- The company is actively investing in technology, exemplified by the launch of the WMG Pulse app, which provides artists with real-time insights from major DSPs and social media platforms.
- WMG is focusing on strategic M&A activities to enhance its market position, with plans to reinvest cost savings into high-quality music assets with high margins.
Negative Points
- WMG experienced a decrease in adjusted OIBDA by 1% and a decline in adjusted OIBDA margin by 50 basis points, primarily due to revenue mix.
- The company faced market share pressure in China and a tough year-over-year comparison in subscription streaming, impacting overall growth.
- Ad-supported streaming revenue declined by 3% due to a soft overall ad environment.
- Artist services and expanded rights revenue decreased by 6%, attributed to lower concert promotion revenue and ongoing weakness in the e-commerce business.
- The company anticipates challenges in subscription streaming growth to persist for the remainder of the fiscal year, resulting in lower growth than previously expected.
Q & A Highlights
Q: Given the challenging quarter and limited visibility, what confidence can you give investors about Warner Music's growth prospects? Also, how are you thinking about subscription streaming growth for the year?
A: Robert Kyncl, CEO: We are excited about our strategy, which focuses on growing market share, increasing the value of music, and improving efficiency to reinvest in music and technology. Our investments in A&R are showing early signs of success, with significant chart presence and market share growth in new releases. We expect similar trends as in Q2 for the rest of the year.
Q: Can you elaborate on your strategy to grow global market share, especially in emerging markets? Also, what happened in China regarding subscription streaming?
A: Robert Kyncl, CEO: We have strong leadership in high-growth markets like Mexico and Brazil. In China, we expect the current trends to continue for the rest of the year. We have a new head of Asia starting soon to help drive growth in the region.
Q: How should we think about the timing of benefits from DSP renewals?
A: Robert Kyncl, CEO: While I can't go into specific details, the benefits from DSP renewals will take time to materialize. We are making progress, but there's still work to be done.
Q: What changed in your expectations for high single-digit subscription growth? Was it mainly due to China, and how does the lighter release slate factor in?
A: Robert Kyncl, CEO: Our results are impacted by tough comps, market pressure, a lighter release schedule, and weakness in China. The release slate can shift due to various creative reasons, affecting the volume of releases.
Q: Can you discuss your investments in A&R and the outlook for margins?
A: Robert Kyncl, CEO: We focus on capital allocation based on global value of local repertoire. Bryan Castellani, CFO: Margins were affected by lower streaming growth and increased investments in tech and A&R. We will provide more updates on margins in the next call.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
