Warner Music Group Corp. today announced its fourth-quarter and full-year financial results for the periods ended September 30, 2023.

“We delivered on our promise of second-half improvement, and reached over $6 billion in annual revenue for the first time in WMG’s history,” said Robert Kyncl, CEO, Warner Music Group. “As the music ecosystem is recognizing the value of premium content and emerging markets continue to gain traction, our industry is healthy and growing. With these tailwinds at our back, we’ve been working hard to build a WMG that will excel in the music industry of tomorrow and look forward to bringing you incredible music in 2024 from our extraordinary artists and songwriters.”

 

“Our performance in the quarter was underpinned by a solid release slate and momentum in our Recorded Music streaming growth,” said Bryan Castellani, CFO, Warner Music Group. “This fueled our second-half improvement which, combined with our disciplined cost management, resulted in robust Adjusted OIBDA growth and margin expansion for the full year. We are excited about the opportunities that lie ahead for WMG to capitalize on favorable industry trends and drive shareholder value through profitable growth and healthy cash flow conversion in 2024 and beyond.”

( Fourth-Quarter Results )

Revenue was up 5.9% (or 4.5% in constant currency). Digital revenue increased 8.0% (or 7.1% in constant currency), which includes the impact in the prior-year quarter of $38 million in downloads and other digital revenue from the settlement of certain copyright infringement cases (the “Copyright Settlement”). Streaming revenue increased 12.6% (or 11.6% in constant currency). Recorded Music streaming revenue increased by 9.6% (or 8.9% in constant currency). Growth in Recorded Music streaming revenue increased due to a stronger release schedule and growth in ad-supported revenue, which includes the impact of the Company’s TikTok renewal. Music Publishing streaming revenue increased by 28.4% (or 25.8% in constant currency), which includes a benefit in the quarter and the prior-year quarter of $17 million and $3 million, respectively, resulting from a ruling by the Copyright Royalty Board in Phonorecords III upholding higher percentage of revenue U.S. mechanical royalty rates (the “CRB Rate Benefit”). Revenue increases in the quarter were also driven by growth in Recorded Music licensing and physical revenue and Music Publishing mechanical, performance and synchronization revenue. Recorded Music artist services and expanded-rights revenue was lower on an as-reported basis and in constant currency. Excluding the Copyright Settlement and the CRB Rate Benefit, revenue increased 7.8% (or 6.3% in constant currency).

As of September 30, 2023, the Company reported a cash balance of $641 million, total debt of $3.964 billion and net debt (defined as total debt, net of deferred financing costs, premiums and discounts, minus cash and equivalents) of $3.323 billion.

( Full-Year Results )

Total revenue increased 2.0% (or 3.9% in constant currency). As previously disclosed, the prior year included an additional week, primarily reflected in Recorded Music streaming revenue. Digital revenue increased 3.2% (or 4.9% in constant currency), which includes the impact in the prior year of $38 million in downloads and other digital revenue from the Copyright Settlement. Total streaming revenue increased 4.9% (or 6.7% in constant currency) driven by growth across Recorded Music and Music Publishing. Recorded Music streaming revenue increased by 2.0% (or 3.9% in constant currency), which reflects a lighter release schedule and the market-related slowdown in ad-supported revenue in the first half of the year, as well as the impact of an additional week in the prior year. Music Publishing streaming revenue increased by 21.7% (or 22.6% in constant currency), which includes the impact in the year and the prior year of $24 million and $20 million, respectively, from the CRB Rate Benefit. Revenue increases in the year were also driven by growth in Recorded Music licensing revenue and Music Publishing performance and mechanical revenue. Recorded Music physical and artist services and expanded-rights revenue and Music Publishing synchronization revenue were lower on an as-reported basis and in constant currency. Excluding the impact of an additional week in the prior year, the Copyright Settlement and the CRB Rate Benefit, revenue increased 3.9% (or 5.9% in constant currency).

( Fourth-Quarter Results )

Recorded Music revenue was up 3.8% (or 2.5% in constant currency). Digital revenue was up 5.7% (or 4.9% in constant currency), which includes the impact in the prior-year quarter of $31 million in downloads and other digital revenue from the Copyright Settlement. Streaming revenue was up 9.6% (or 8.9% in constant currency). Growth in streaming revenue increased due to a stronger release schedule and growth in ad-supported revenue, which includes the impact of the Company’s TikTok renewal. Licensing revenue increased 9.2% (or 6.7% in constant currency), with growth in broadcast fees and other licensing. Physical revenue was up 5.7% (the same in constant currency) primarily due to stronger performance in the United States. Artist services and expanded-rights revenue decreased 7.4% (or 10.8% in constant currency) primarily due to lower merchandising revenue, partially offset by an increase in concert promotion revenue. Excluding the Copyright Settlement, revenue increased 6.4% (or 5.0% in constant currency). The quarter included successful releases from the Barbie soundtrack, FIFTY FIFTY, Ed Sheeran, MISAMO and Zach Bryan.

( Full-Year Results )

Recorded Music revenue was down 0.2% (or up 1.8% in constant currency). Digital revenue was up 0.5% (or 2.4% in constant currency), which includes the impact in the prior year of $31 million in downloads and other digital revenue from the Copyright Settlement. Streaming revenue was up 2.0% (or 3.9% in constant currency). Adjusted for the impact of an additional week in the prior year, Recorded Music streaming revenue was up 4.0% (or 5.8% in constant currency), which reflects a lighter release schedule and the market-related slowdown in ad-supported revenue in the first half of the year. Licensing revenue increased 15.4% (or 18.3% in constant currency), which includes growth across broadcast fees, synchronization and other licensing revenue. Physical revenue was down 9.9% (or 6.8% in constant currency) primarily due to a lighter release schedule in the first half of the year. Artist services and expanded-rights revenue was down 3.0% (or 1.5% in constant currency), due to a decrease in merchandising and advertising revenue, partially offset by an increase in concert promotion revenue. Excluding the impact of an additional week in the prior year and the Copyright Settlement, revenue increased 1.9% (or 4.0% in constant currency). The year included successful releases from Ed Sheeran, Zach Bryan, Linkin Park and Dua Lipa.

( Fourth-Quarter Results )

Music Publishing revenue increased 17.3% (or 15.1% in constant currency). The increase was driven by growth across all revenue types. Digital revenue increased 20.8% (or 18.5% in constant currency), which includes the impact in the prior-year quarter of $7 million in downloads and other digital revenue from the Copyright Settlement. Streaming revenue increased 28.4% (or 25.8% in constant currency), reflecting the continued growth in streaming, the impact of digital deal renewals, which includes the Company’s TikTok renewal, and a $14 million quarter-over-quarter increase in the impact of the CRB Rate Benefit. Adjusted for the impact of the Copyright Settlement and the CRB Rate Benefit, digital revenue increased 17.4% (or 15.1% in constant currency) and streaming revenue increased 19.3% (or 16.9% in constant currency). Mechanical and performance revenue increased due to timing of distributions. Synchronization revenue increased primarily due to stronger performance in the United States. Excluding the Copyright Settlement and the CRB Rate Benefit, revenue increased 15.2% (or 12.9% in constant currency).

( Full-Year Results )

Music Publishing revenue increased 13.6% (or 15.0% in constant currency). The increase was driven by growth in digital, performance and mechanical revenue. Digital revenue increased 18.8% (or 19.9% in constant currency), which includes the impact in the prior year of $7 million in downloads and other digital revenue from the Copyright Settlement. Streaming revenue increased 21.7% (or 22.6% in constant currency), reflecting the continued growth in streaming, the impact of digital deal renewals, which includes the Company’s TikTok renewal, a previously disclosed revenue true-up of $9 million in the year and a $4 million year-over-year increase in the impact of the CRB Rate Benefit. Performance revenue increased primarily due to continued recovery from COVID disruption in the first half of the year. Mechanical revenue increased due to a higher share of physical sales and timing of distributions. Synchronization revenue decreased due to lower commercial licensing activity, partially offset by copyright infringement settlements. Excluding the Copyright Settlement and the CRB Rate Benefit, revenue increased 14.3% (or 15.8% in constant currency).