Photo Credit: Warner Music Group
Warner Music Group announces its first-quarter financial results for the period ended on December 31, 2023.
Warner Music Group has announced its financial results for the first quarter ended on December 31, 2023. Among the highlights include double-digit growth in revenue and adjusted OIBDA as both recorded music and music publishing delivered the highest quarterly revenue in company history.
“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, Warner Music Group CEO. “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,” added Bryan Castellani, Warner Music Group CFO. “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.”
Overall revenue and specifically recorded music revenue increased by 17%, while music publishing revenue saw a 22% increase. The quarter included $68 million from a licensing agreement extension for an artist’s catalog in recorded music licensing revenue and the impact of the termination of the distribution agreement with BMG in digital recorded music revenue. That resulted in $13 million less revenue compared to the previous year’s quarter.
The quarter also saw $27 million of incremental revenue from a renewal with a digital partner that resulted in upfront revenue recognition during the quarter. Without the licensing extension, the BMG termination, and the digital license renewal, total revenue was up by 12%.
Music publishing streaming revenue increased by 32%, with revenue increases in the quarter also driven by growth in recorded music licensing and physical revenue, as well as music publishing performance revenue. This is partially offset by a decline in recorded music artist services and expanded-rights revenue.
Adjusted OIBDA grew by 35% to $451 million, with a 3.3% margin increase from 22.5% to 25.8% in the previous year’s quarter, primarily due to the $67 million impact of the aforementioned digital license renewal. That said, the adjusted OIBDA impact from the BMG termination was not impactful during the quarter.
Excluding the impact of the licensing extension and digital license renewal, adjusted OIBDA increased by 11.7%, while the margin decreased by 0.1 percentage point from 22.7% to 22.6%.
The company reported a cash balance of $754 million as of December 31, 2023, a total debt of $4.004 billion, and net debt (total debt, net of deferred financing costs, premiums, and discounts, minus cash and equivalents) of $3.25 billion.