Warner Music Group reported quarterly revenues grew 1.7% to $1.399 billion (4.6% in constant currency) as strong revenues from its music publishing revenue helped offset a slow quarter for recorded music releases.
WMG, the music industry’s third largest major label, reported revenue from its recorded music revenue was effectively flat at $1.143 billion for the second fiscal quarter ending March 31, compared to $1.147 billion in the year ago quarter. (In constant currency, recorded music revenue rose 2.5%.) Streaming revenue in the quarter was down 0.4% (or, in constant currency 2.2% higher) on fewer releases and a slowdown in ad-supported revenue due to macroeconomic uncertainty.
In contrast, music publishing revenue rose 12% to $257 million from $230 million a year ago.
“While our publishing was best in class, we underperformed in recorded music,” Robert Kyncl, chief executive officer, said on a conference call.
WMG executives have said throughout this fiscal year that the label’s major releases of the year would come in the second half, and on the call, they stressed they are already seeing improvement with the late-April releases of Jack Harlow’s Jackman., Tïesto’s Drive and Ed Sheeran’s Subtract, released in early May.
“Our release slate was a little lighter in the first two quarters of the year and will be weighted to (the third quarter) and (the fourth quarter),” Warner chief financial officer Eric Levin said, flagging releases expected from Dua Lipa with her Barbie soundtrack track, among others.
“We absolutely expect this to improve our results in recorded music streaming in the second half of the year.”
Key Points From WMG’s Q2:
- WMG’s revenues grew 1.7% (or 4.6% in constant currency, a measure that standardizes foreign exchange fluctuations) to $1.399 billion
- Digital revenue increased 1.2% (or 3.7% in constant currency) to
- Streaming revenue increased 1.9% (or 4.5% in constant currency) on growth in music publishing streaming
- Music publishing revenue increased 12%, or 14.2% in constant currency
- Music publishing streaming revenue grew 16.4% (18.3% in constant currency)
- Recorded music streaming revenue decreased 0.4% (an increase of 2.2% in constant currency) on a lighter release schedule, foreign exchange currency fluctuations and slowdown in ad-supported revenue.
- Net income was $37 million this quarter, down 60% from $92 million one year ago, primarily driven by the negative impact of currency fluctuations on the company’s Euro-denominated debt. Adjusted net income up 5% to $116 million from $111 million a year ago.
- Operating income was $124 million, down 25% from $166 million a year ago, with adjusted operating income up 10% to $203 million from $185 million.
- Adjusted net income of $116 million was up 5% from $111 million in the year ago quarter.