Warner Music Hits $6B Milestone for the Year After Second-Half Rebound

Warner Music Group reported quarterly revenue was up 6% as of Sept. 30, as the third-largest U.S.-based music rode a solid release slate that included the Barbie soundtrack, Zach Bryan and FIFTY FIFTY to eclipse $6 billion in overall annual revenue for the first time.

WMG reported revenue for its fiscal fourth quarter rose to $1.58 billion, driven by a stronger release schedule and a 17% uptick in music publishing revenue of $298 million. Streaming revenue rose by 12.6% overall and digital revenue was up 8% to $1.06 billion compared to the year ago quarter. Net profit edged slightly higher to $154 million from $150 million a year ago.

“We’ve been working hard to build a WMG that will excel in the music industry of tomorrow,” said WMG CEO Robert Kyncl on the company’s earnings call. “Our work is already beginning to bear fruit and I assure you that there is much more excitement to come … Looking forward to a new fiscal year, I’m even more optimistic than I was when I started. We’re excited about the trends we’re seeing in the industry and energized by our plans to capitalize on them.”

WMG’s share price edged lower in morning trading, down 3.3% to $31.76 on Thursday at 10:00 a.m. New York time.

Recorded music revenue over the course of the quarter rose 4% to nearly $1.3 billion, bolstered by a 6% increase in digital revenue to $877 million and a 9.6%% increase in streaming revenue ($848 million on its own) on the stronger release schedule and growth in ad-supported revenue, which WMG said reflects the company’s TikTok licensing renewal. Licensing revenue increased 9.2% to 95 million, and artist services and expanded-rights revenue decreased 7.4% to $189 million, due to sagging merchandising revenue. Physical revenue ticked up 5.7% to $130 million, thanks to that aforementioned better slate of albums releases. Downloads? Down 48% for the quarter at just $29 million in revenue.

The growth in music publishing revenues was driven by a 20.8% uptick in digital revenue to $192 million and 28.4% increase in streaming revenue, reflecting the impact of digital deal renewals (ie. TikTok) and a revenue true-up of $14 million from the CRB. Mechanical revenue spiked about 42% — to $17 million — primarily due to the timing of distributions in the quarter, and synchronization was basically flat at $41 million.

WMG prefers to use operating income before depreciation and amortization (OIBDA) as a metric to assess its overall business health, and OIBDA increased 19% to $291 million in the quarter compared to $245 million a year ago. Adjusted OIBDA rose 20% to $317 million from $265 million a year ago.

Key WMG financial highlights for its Q4:

Panning to look at WMG’s full-year results, for the 12 months ended Sept. 30, the company stressed that fiscal 2022 benefited from having an additional week in the reporting period. Despite first-half challenges, the company was able to pull up it total revenue by 2% to touch $6 billion for the first time. The company first hit the $5 billion mark in 2021.

Out of that $6 billion, nearly $5 billion was from the recorded music segment, which was actually flat thanks in part to a blah year for physical revenue, down 9.9% due to a light release schedule in the first half. Recorded music digital revenue — which includes streaming and downloads — was up 1% to $3.3 billion. The remaining billion ($1.088 billion to be exact) derived from music publishing, which improved by 14% year-over-year. Digital revenue in publishing encompassed $669 of that tally, an increase of 19% aided mostly by a 22% jump in streaming revenue to $656 million. Overall publishing revenue was padded out by results for performance ($174 million), synchronization ($167 million) and mechanical ($63 million).

Net income was $439 million versus $555 million in the prior year, a decrease that the company blames on exchange rates, interest expenses and a “loss on extinguishment of debt.” OIBDA on the year increased 7% to $1.2 billion versus $1 billion in the prior year.

Key WMG financial highlights for its full fiscal year: