Warner Music Group just posted an 10.7% year-on-year rise in revenues for the three months to end of March this year to $825m. No prizes for guessing why.
According to documents filed with the SEC, Warner’s recorded music division generated $300m from streaming services in the quarter (calendar Q1, but Warner’s fiscal Q2).
That was up 45%, or $93m, on the $207m the company generated from streaming in the same period of 2016.
Overall, Warner’s recorded music division posted revenues of $686m in the quarter, up 10% or $65m on the prior year.
This was despite a 17.4% fall in Q2 download revenues, which dropped $21m year-on-year to $100m – exactly one third of the size of streaming’s cash haul.
Meanwhile, physical music sales decreased by 6% ($9m) to $142m, as licensing revenue remained flat at $63m.
Artist services and expanded-rights revenue increased by $2m (to $81m) primarily due to merchandise revenue generated from successful US artists.
Strong performers in the three months included Ed Sheeran’s new album “÷”, in addition to the continued success of Bruno Mars, Twenty One Pilots, the Hamilton soundtrack and Ed Sheeran’s previous album “x”.
In the world of music publishing, WMG’s Warner/Chappell saw quarterly revenues grow 14.2% year-on-year to $145m.
This was mainly driven by increases in digital revenue of $10m (to $43m) , performance revenue of $6m (to $50m) and synchronization revenue of $2m (to $32m).
The increase in digital revenue was due to an increase in streaming revenue of $8m and digital download of $2m.
Performance revenue grew due to increased public broadcast distributions and timing of local collection society distributions.
Synchronization revenue increased due to increased film and commercial income.
Mechanical revenues were flat at $17m.
In terms of Warner Music Group’s overall results (across publishing and recorded music combined), revenue grew 10.7% (or 12.7% in constant currency).
Operating income was $78 million, compared to $52 million in the prior-year quarter.
OIBDA increased 11.0% to $141 million from $127 million in the prior-year quarter and OIBDA margin rose 0.1 percentage point to 17.1% from 17.0% in the prior-year quarter.
“We had another excellent quarter, with double-digit growth in both the current and prior-year quarters,” said Steve Cooper, Warner Music Group’s CEO. “Our streaming revenue is now double that of physical and triple that of downloads. An improved industry environment is helping, but we continue to outperform our competition due to fantastic new music and outstanding execution by our operators around the world.”
“Although tough comparisons could make for a more challenging second half, I’m confident we’ll have another great full fiscal year.”
Eric Levin, Warner Music Group
“This was a very strong quarter, marking the 7th consecutive quarter of year-over-year revenue growth,” added Eric Levin, Warner Music Group’s Executive Vice President and CFO. “Although tough comparisons could make for a more challenging second half, I’m confident we’ll have another great full fiscal year.”
The improvement in operating income and OIBDA was the result of increased revenue.
The increase in OIBDA margin was due to revenue mix, which was partially offset by higher variable compensation expense. Adjusted OIBDA rose 13.2% and Adjusted OIBDA margin was up 0.4 percentage points to 17.7% as a result of the same factors that impacted OIBDA and OIBDA margin.
Net income was $20 million, compared to $12 million in the prior-year quarter, and Adjusted net income was $25 million, compared to $14 million in the prior-year quarter.Music Business Worldwide
