Warner Music posted solid results for the fiscal year — although flatter ones for the last quarter — in its earnings report on Thursday, driven by a 7% boost in the important digital revenue category and 8.2% in streaming revenue for the year. Net income was $478 million versus $439 million in prior year, with adjusted OIBDA increased 16% to $1,432 million versus $1,235 million in prior year (the same in constant currency)
The company also pointed to a fourth consecutive year of double-digit revenue growth for its Warner Chappell publishing division and the hot year from its revived Warner Records label.
The company noted that although its recorded music streaming revenue increased 6.9% (or 7.3% in constant currency), minus the ongoing impact of the termination of its distribution deal with BMG termination ($81 million) and a digital license renewal of $16 million, recorded music streaming revenue increased 9.1% (or 9.6% in constant currency). Music publishing streaming revenue increased 14.6% (or 14.1% in constant currency); noting another caveat, it pointed to the impact of the CRB rate benefit of $24 million in the prior year, music publishing streaming revenue was up 19.0% (or 18.5% in constant currency).
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However, for the quarter ended September 30, the company’s total revenue increased just 3% and digital revenue was down 0.2% compared to prior-year quarter, with streaming revenue up just 1%. Net income was $48 million versus $154 million in prior-year quarter, and adjusted OIBDA increased 11% to $353 million versus $317 million in prior-year quarter (the same in constant currency. The company noted that, adjusted for the impact from the BMG Termination of $24 million and the Digital License Renewal of $4 million, recorded music streaming revenue was up 5.6% (or 6.0% in constant currency). Subscription revenue, adjusted by $23 million for the BMG Termination and by $4 million for the Digital License Renewal, increased 9.7% (or 10.6% in constant currency).
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Top sellers for the company included Benson Boone, Zach Bryan, Teddy Swims, Dua Lipa and Charli XCX, and CEO Robert Kyncl also pointed to the success of Rosé and Bruno Mars, Coldplay, Don Toliver and the Marias, as well as newer artists such as Artemas, Forrest Frank and Jordan Adetunji, jazz artist Chezile, singer/ songwriter Sam Barber and rapper Hunxho.
Referencing major structural changes to the company that have seen the exit of longtime Atlantic Music Group Chair Julie Greenwald — replaced by 10K Projects founder Elliot Grainge — and recorded-music CEO Max Lousada, WMG CEO Robert Kyncl said on the earnings call “This year, we’ve reimagined our organization, based on the principle that simplicity and focus drive higher intensity and impact. We’ve done a lot of important work…which has set us up for success today…and will help us grow more profitably in the future: We’ve strengthened our presence in the U.S., the world’s largest music market; we’ve shifted to a simpler and flatter organizational structure; we’ve reorganized key business lines such as Catalog and Distribution in order to deliver greater global reach; we’ve continued to find ways to strengthen the coordination across our record music and music publishing divisions; and we’ve fixed a lot of our foundational infrastructure issues that will now enable our technology team to be more offensively focused.”
However, when asked directly about 10K’s success, Kyncl became more vague, saying that he didn’t have 10K’s financials handy but said their numbers showed “phenomenal growth” and the company’s “digitally native” stance and start-up “intensity” positioned it well for success. Asked how Grainge will adapt to the much-larger Atlantic organization, he said only that in order to succeed in that role, an executive must be “really great at working well in a larger organization,” have a “flexible mindset and work well with others.”
According to the report, for the year, recorded music revenue was up 5.4% (or 5.6% in constant currency), largely driven by growth in licensing revenue of 31.2% (or 30.1% in constant currency) which includes $68 million from the Licensing Extension in the year, as well as growth in synchronization and other licensing revenue. Excluding the impact of the Licensing Extension, the Digital License Renewal and the BMG Termination, Recorded Music revenue was up 5.6% (or 5.7% in constant currency). Digital revenue was up 5.9% (or 6.4% in constant currency), largely driven by growth in streaming revenue of 6.9% (or 7.3% in constant currency). Adjusted for the impact of the BMG Termination of $81 million and the Digital License Renewal of $16 million, Recorded Music streaming revenue was up 9.1% (or 9.6% in constant currency). Streaming revenue reflects growth in subscription revenue of 8.3% (or 9.2% in constant currency) and growth in ad-supported revenue of 3.1% (or 2.3% in constant currency).
For the year, Music Publishing revenue increased 11.2% (or 11.0% in constant currency). Excluding the impact from the CRB Rate Benefit of $24 million in the prior year, Music Publishing revenue increased 13.7% (or 13.5% in constant currency). The increase was driven by growth in digital, performance and synchronization revenue, partially offset by lower mechanical revenue. Digital revenue increased 14.1% (or 13.7% in constant currency), which includes the impact of $24 million in the prior year from the CRB Rate Benefit. Streaming revenue increased 14.6% (or 14.1% in constant currency) or increased 19.0% (or 18.5% in constant currency) after excluding the impact of the CRB Rate Benefit in the prior year. However, its revenue decreased 1% for the quarter.
