Q3 2026 Warner Music Group Corp Earnings Call Transcript
Key Points
- Delivered strong financial results with total revenue up 9% (11% adjusted) and adjusted OIBDA up 15%, marking the fifth consecutive quarter of meeting or exceeding targets.
- Recorded music subscription streaming revenue grew 12% on an adjusted basis, driven by contractual wholesale price increases now covering 88% of subscription revenue, including a new deal with Apple.
- Continued market share gains in the U.S. streaming (up 0.3 percentage points year-to-date) and new release share (up 0.8 percentage points), largely organic, with a strong release slate including Miley Cyrus and Madonna.
- Music publishing revenue grew 11% with streaming up 14%, and the company renewed key deals with artists like Riley Green and Quevedo, while also expanding distribution through the Revelator acquisition and new partnerships.
- Margin expansion of 100 basis points (130 basis points adjusted) and strong cash flow generation (operating cash flow up 209%) supported by cost savings initiatives and a disciplined capital allocation framework.
- AI licensing deals (e.g., Suno, Stability AI) are on track to contribute materially to revenue starting in fiscal 2027, with regulatory wins in Chile and Australia supporting copyright protection.
- U.S. streaming market share was weak in the quarter according to Luminate data, though management attributes this to lumpiness and points to global gains.
- Ad-supported streaming growth of 10% was elevated due to one-time World Cup ad spending and is expected to normalize to mid-single-digit growth in Q4.
- Subscription streaming growth decelerated slightly due to a tough comparison from the prior year, with a 2-3% impact noted.
- The departure of CFO Armin Zerza for personal reasons introduces leadership uncertainty, though the company has appointed an acting CFO and is conducting a search.
- AI licensing deals are still in early stages, with operational challenges in permissioning processes for artists, and the company has not yet finalized agreements with all DSPs on AI tiers.
- Physical revenue growth of 17% is partly driven by specific releases (e.g., Madonna) and may not be sustainable, while licensing revenue declined 1% in the quarter.
Welcome to Warner Music Group's Third Quarter Earnings Call for the period ended June 30, 2026. At the request of Warner Music Group, today's call is being recorded for replay purposes and if you object, you may disconnect at any time.
Now I would like to turn today's call over to your host, Mr. Kareem Chin, Head of Investor Relations. You may begin
Good afternoon, and welcome to Warner Music Group's Fiscal Third Quarter Earnings Call. Please note that our earnings press release, earnings snapshot and Form 10-Q are available on our website. On today's call, we have our CEO, Robert Kyncl, and our acting CFO, Lou Dickler, who will take you through our results and then answer your questions.
Before our prepared remarks, I would like to remind you that this communication includes forward-looking statements that reflect the current views of Warner Music Group about future events and financial performance. We plan to present certain non-GAAP results including
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