Financial Highlights

• Double-Digit Revenue Growth Underpinned by Strong Operating Performance across Recorded Music and Music Publishing
• Acceleration in Recorded Music Streaming Growth Driven by Per Subscriber Minimum Increases and Continued Market Share Gains
• Robust Margin Expansion Supported by Operating Performance and Cost-Savings Delivery; High End of 150-200 Basis Points Full-Year Margin Expansion Guidance Expected
• Joint Venture with Bain Acquired $650 million in Recorded Music and Music Publishing Catalogs

For the three months ended March 31, 2026

• Total revenue increased 17%, or 12% in constant currency
• Net income was $181 million compared to $36 million in the prior-year quarter
• Operating income increased 57% to $264 million versus $168 million in the prior-year quarter
• Adjusted OIBDA increased 31% to $397 million versus $303 million in the prior-year quarter, or 24% in constant currency
• Earnings per share was $0.35 compared to $0.07 in the prior-year quarter
• Adjusted earnings per share was $0.44 compared to $0.32 in the prior-year quarter
• Cash provided by operating activities increased to $126 million versus $69 million in the prior-year quarter

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Warner Music Group Corp. has announced its second-quarter financial results for the period ended March 31, 2026.

“Our Q2 results demonstrate the powerful combination of creative and operational success, as well as financial discipline, providing clear evidence that our strategic transformation is working,” said Robert Kyncl, CEO, Warner Music Group. “Anchored by our 3 strategic pillars to grow share, increase the value of music, and improve efficiency and effectiveness, our momentum is building and we are well-positioned to continue delivering long-term value for our artists, songwriters, and shareholders.”

“For the fourth consecutive quarter, we have delivered on our sustainable growth model, accelerating core growth, margin expansion, and cash flow productivity,” said Armin Zerza, CFO, Warner Music Group. “Behind a profitable growth engine that pairs disciplined capital allocation and rigorous cost management with industry-leading creative and AI initiatives, we are well-positioned to create significant long-term value for our shareholders.”

TOTAL WMG

Revenue was up 16.7% (or 12.1% in constant currency). Recorded Music revenue comparisons were impacted by a digital revenue settlement of $11 million in the prior-year quarter (the “DSP True-Up and Settlement Payments”). Consistent with prior quarters, Recorded Music revenue growth was also unfavorably impacted by the termination of the distribution agreement with BMG (the “BMG Termination”), which resulted in $6 million less Recorded Music digital revenue compared to the prior-year quarter. Excluding these items, total revenue increased 18.1% (or 13.4% in constant currency).

Digital revenue was up 16.7% (or 12.3% in constant currency) and streaming revenue was up 17.1% (or 12.9% in constant currency). Recorded Music streaming revenue increased 16.5% (or 12.1% in constant currency); however, adjusted for the $11 million impact of the DSP True-Up and Settlement Payments and the $6 million impact of the BMG Termination, Recorded Music streaming revenue was up 18.9% (or 14.4% in constant currency). Music Publishing streaming revenue increased 20.0% (or 16.2% in constant currency). The increase in total revenue was also driven by higher Recorded Music artist services and expanded-rights and physical revenue, and growth across Music Publishing performance, synchronization and mechanical revenue, partially offset by slightly lower Recorded Music licensing revenue.

Operating income increased 57.1% (or 45.1% in constant currency) to $264 million from $168 million in the prior-year quarter primarily due to the factors affecting Adjusted OIBDA discussed below, as well as a decrease in restructuring and impairment charges of $7 million, partially offset by higher amortization expense of $10 million.

Adjusted OIBDA increased 31.0% (or 24.5% in constant currency) to $397 million from $303 million and Adjusted OIBDA margin increased 2.5 percentage points to 22.9% from 20.4% in the prior-year quarter (or 2.3 percentage points from 20.6% in constant currency). The increases include the $7 million impact of the DSP True-Up and Settlement Payments and the $1 million impact of the BMG Termination. Excluding these items, Adjusted OIBDA increased 34.6% (or 27.7% in constant currency) and Adjusted OIBDA margin increased 2.8 percentage points to 22.9% from 20.1% (or 2.5 percentage points from 20.4% in constant currency). The increases in Adjusted OIBDA and Adjusted OIBDA margin were primarily driven by revenue mix and savings from the Company’s restructuring plans, a portion of which has been reinvested into the Company’s business, partially offset by unfavorable movements in foreign currency exchange rates of approximately $13 million.

Net income was $181 million compared to $36 million in the prior-year quarter. The increase in net income was due to the impact of exchange rates on the Company’s Euro-denominated debt resulting in a $22 million gain in the quarter compared to a $34 million loss in the prior-year quarter and a currency exchange gain on intercompany loans of $12 million in the quarter compared to a $27 million loss in the prior-year quarter. The prior-year quarter also includes realized and unrealized losses on hedging activity of $6 million. The increase in net income was partially offset by a $44 million increase in income tax expense, primarily due to an increase in pre-tax income in the quarter and a taxable gain on contribution to the Company’s joint venture with Bain Capital (the “Beethoven JV”). These changes were partially offset by the tax benefit associated with partial release of valuation allowance on EMP.

Basic earnings per share was $0.35 for both the Class A and Class B shareholders due to the net income attributable to the Company in the quarter of $181 million. Diluted earnings per share was $0.34 for both the Class A and Class B shareholders due to the net income attributable to the Company in the quarter of $181 million.

As of March 31, 2026, the Company reported a cash balance of $741 million, total debt of $4.719 billion and net debt (defined as total debt, net of deferred financing costs, premiums and discounts, minus cash and equivalents) of $3.978 billion. Total debt includes $303 million of subsidiary debt acquired in the Company’s acquisition of Tempo Music Holdings, LLC (“Tempo Music”) and $370 million in loans outstanding under the Beethoven JV. This debt is secured only by certain music rights owned by Tempo Music and the Beethoven JV, respectively, and is nonrecourse to the Company and its subsidiaries, other than Tempo Music and the Beethoven JV, respectively.

Cash provided by operating activities increased 83% to $126 million in the quarter compared to $69 million in the prior-year quarter. The increase was largely a result of strong operating performance. Free Cash Flow, as defined below, increased to $99 million from $33 million in the prior-year quarter, primarily due to the factors affecting cash provided by operating activities described above and due to a decrease in capital expenditures of 25% to $27 million from $36 million in the prior-year quarter, driven by higher investments in technology in the prior-year quarter.

RECORDED MUSIC

Recorded Music revenue was up 17.4% (or 12.7% in constant currency) driven by increases across digital, artist services and expanded-rights and physical revenue, partially offset by a slight decrease in licensing revenue. Excluding the $11 million impact of the DSP True-Up and Settlement Payments and the $6 million impact of the BMG Termination, Recorded Music revenue was up 19.2% (or 14.2% in constant currency). Digital revenue was up 15.9% (or 11.4% in constant currency) and streaming revenue was up 16.5% (or 12.1% in constant currency). Adjusted for the $11 million impact of the DSP True-Up and Settlement Payments and the $6 million impact of the BMG Termination, Recorded Music digital revenue was up 18.3% (or 13.6% in constant currency) and streaming revenue was up 18.9% (or 14.4% in constant currency). Streaming revenue reflects growth in subscription revenue of 18.0% (or 12.7% in constant currency) and in ad-supported revenue of 11.8% (or 10.2% in constant currency). Subscription revenue, adjusted for the $11 million impact of the DSP True-Up and Settlement Payments and the $4 million impact of the BMG Termination, was up 20.9% (or 15.4% in constant currency). Ad-supported revenue, adjusted for the $2 million impact of the BMG Termination, was up 12.9% (or 11.3% in constant currency). The increase in subscription revenue reflects positive market share trends and a favorable comparison against a softer prior-year quarter. The increase in ad-supported revenue reflects a strong overall ad environment in the quarter. Artist services and expanded-rights revenue was up 40.2% (or 33.3% in constant currency) due to higher concert promotion revenue primarily in France and higher merchandising revenue. Physical revenue increased 22.3% (or 18.1% in constant currency) primarily driven by strong releases in the quarter as well as catalog and carryover success. Licensing revenue decreased 1.0% (or 6.3% in constant currency). Top sellers in the quarter included Bruno Mars, Alex Warren, sombr, Ed Sheeran and Melanie Martinez.

Recorded Music operating income increased 41.9% (or 34.6% in constant currency) to $288 million from $203 million in the prior-year quarter, and operating margin was up 3.6 percentage points to 20.9% versus 17.3% in the prior-year quarter (or up 3.4 percentage points from 17.5% in constant currency). The increase in operating income and operating income margin was driven by the factors affecting Adjusted OIBDA discussed below, as well as decreases in restructuring and impairment charges of $7 million and depreciation expense of $3 million, partially offset by higher amortization expense of $4 million attributable to acquisitions.

Adjusted OIBDA increased 28.1% (or 22.3% in constant currency) to $346 million from $270 million and Adjusted OIBDA margin increased 2.1 percentage points to 25.1% from 23.0% in the prior-year quarter (or increased 2.0 percentage points from 23.1% in constant currency). The increases include the $7 million impact of the DSP True-Up and Settlement Payments and the $1 million impact of the BMG Termination. Excluding these items, Adjusted OIBDA increased 32.1% (or 25.8% in constant currency) and Adjusted OIBDA margin increased 2.5 percentage points to 25.1% from 22.6% (or 2.3 percentage points from 22.8% in constant currency). The increases in Adjusted OIBDA and Adjusted OIBDA margin were primarily driven by revenue mix and savings from the Company’s restructuring plans, of which a portion has been reinvested in the Company’s business, partially offset by unfavorable movements in foreign currency exchange rates of approximately $9 million.

MUSIC PUBLISHING

Music Publishing revenue was up 13.9% (or 9.6% in constant currency) driven by growth across digital, performance, synchronization and mechanical revenue. Digital revenue increased 19.1% (or 15.5% in constant currency) and streaming revenue increased 20.0% (or 16.2% in constant currency) driven by the impact of new deals and renewals and continued market growth. Performance revenue increased 9.4% (or 3.6% in constant currency) attributable to higher touring and live events activity primarily in Europe. Synchronization revenue increased 2.0% (or decreased 2.0% in constant currency) and mechanical revenue increased 6.3% (the same in constant currency) driven by the timing of distributions.

Music Publishing operating income was up 17.3% (or 10.9% in constant currency) to $61 million from $52 million in the prior-year quarter and operating margin increased 0.5 percentage points to 17.3% from 16.8% in the prior-year quarter (or 0.2 percentage points from 17.1% in constant currency). The increases in operating income and operating margin were driven by the same factors affecting Adjusted OIBDA discussed below, partially offset by an increase in amortization expense of $6 million in the quarter related to the impact of acquisitions.

Music Publishing Adjusted OIBDA increased 14.1% (or 10.2% in constant currency) to $97 million from $85 million in the prior-year quarter. Adjusted OIBDA margin increased 0.1 percentage point to 27.5% from 27.4% in the prior-year quarter (or 0.2 percentage points from 27.3% in constant currency). The increase in Adjusted OIBDA was primarily driven by revenue growth and strong operating performance, as well as savings from the Company’s restructuring plans, of which a portion has been reinvested in the Company’s business, partially offset by unfavorable movements in foreign currency exchange rates of approximately $4 million. The increase in Adjusted OIBDA margin was primarily driven by revenue mix.

Recent Announcements
In addition, the Company also announced today that its Board of Directors declared a regular quarterly cash dividend of $0.19 per share on the Company’s Class A Common Stock and Class B Common Stock. The dividend is payable on June 2, 2026, to stockholders of record as of the close of business on May 26, 2026.

Financial details for the quarter can be found in the Company’s current Quarterly Report on Form 10-Q for the period ended March 31, 2026, which will be filed this afternoon with the Securities and Exchange Commission.