Warner Music achieves fourth straight quarter of double-digit subscription streaming growth as calendar Q3 revenues hit $1.63bn

There have been plenty of questions about the growth trajectory of streaming revenues at major music companies this year.

Warner Music Group has consistently provided one of the most optimistic responses.

Today (November 21), WMG has announced its fiscal Q4 (calendar Q3) results.

The company has posted double-digit YoY recorded subscription streaming growth on a normalized basis for the fourth quarter in a row.

In calendar Q3 (WMG’s fiscal Q4), the company’s subscription streaming revenues grew 10.6% YoY on a normalized constant currency basis to $645 million.

That follows YoY subscription streaming growth (again, on a normalized basis) of 12.0% in calendar Q4 2023, 13.5% in calendar Q1 2024, and 13.7% in calendar Q2 2024.

There were plenty of other highlights to dig into in WMG’s calendar Q3 results today. Here they are…

According to the company’s fiscal Q4 (calendar Q3) results for the three months ending September 30, 2024, WMG’s total quarterly global revenues reached USD $1.630 billion.

A bit of housekeeping before we dig into the numbers: WMG noted in its filing, which you can see in full here, that its Recorded Music digital revenue growth was unfavorably impacted by the termination of its distribution agreement with BMG, which resulted in $25 million less revenue compared to the prior-year quarter.

Additionally, according to WMG, a renewal with one of the company’s digital partners resulted in a $4 million unfavorable impact within its Recorded Music streaming revenue compared to the prior-year quarter.

Also, WMG reported that its Music Publishing digital revenue growth was unfavorably impacted by a ruling by the Copyright Royalty Board in Phonorecords III upholding higher percentage of revenue US mechanical royalty rates, which resulted in a $17 million benefit in the prior-year quarter.

Excluding the BMG Termination, Digital License Renewal and the CRB Rate Benefit, WMG’s total revenue was up 6% YoY at constant currency

(Including the Licensing Extension, the BMG Termination and the Digital License Renewal, total revenue was up 2.9% YoY at constant currency).

“Our performance this quarter and this year demonstrated our strength and adaptability in a thriving, fast-moving market,” said Robert Kyncl, CEO, Warner Music Group.

“We continue to evolve WMG, based on the principle that simplicity and focus drive higher intensity and global impact.”

Robert Kyncl, Warner Music Group

“We continue to evolve WMG, based on the principle that simplicity and focus drive higher intensity and global impact.

“This is enhancing our ability to attract original artists and songwriters at all stages of their careers, helping them realize their musical visions, and grow passionate, loyal fanbases.”

Recorded Music

Excluding the impact from the BMG Termination and the Digital License Renewal, Warner Music Group’s total Recorded Music revenues were up  6.3% YoY at constant currency to $1.338 billion, driven, according to WMG, “by growth across licensing, digital, physical and artist services and expanded-rights revenue”.

Warner’s recorded music streaming revenue (including ad-supported and subscription) was up 6% YoY on a constant currency basis to $866 million (see below).

WMG breaks that figure down in its balance sheet to highlight the performance of its subscription streaming and ad–supported streaming revenues, respectively.

The company’s revenues from recorded music subscription streaming reached $645 million in calendar Q3, up 10.6% YoY at constant currency (adjusted by $23 million for the BMG Termination and by $4 million for the Digital License Renewal).

WMG generated $221 million in ad-supported recorded music streaming revenues in calendar Q3, which was down 5.6% YoY at constant currency (adjusted by $1 million for the BMG Termination). WMG reported that the performance of its ad-supported streaming revenues in calendar Q3 was driven by the revenue impact of Meta’s discontinued use of premium music videos and its TikTok deal renewal in the prior year.

Warner’s recorded music licensing revenue reached $128 million in calendar Q3, up 33.3% YoY at constant currency, driven according to WMG, by an increase in copyright infringement settlements primarily in the United States and growth in broadcast fees and other licensing.

Meanwhile, Warner’s physical revenue in calendar Q3 reached $134 million, up 4.7% YoY at constant currency, primarily driven by strong releases in Japan and the United States.

Artist services and expanded-rights revenue was up 2.6% YoY at constant currency to $195 million. WMG reports that this performance was driven by “higher concert promotion revenue in Japan, partially offset by lower merchandising revenue and a decrease in revenue related to the exit of the company’s owned and operated media properties announced as part of the Strategic Restructuring Plan”.

Major sellers in the quarter included Benson Boone, Charli XCX, Zach Bryan and Teddy Swims.

Music Publishing

Warner’s global music publishing division – Warner Chappell Music – generated revenues of $295 million in calendar Q3.

Excluding the impact from the CRB Rate Benefit of $17 million in the prior-year quarter, Warner’s Music Publishing revenue increased 5% YoY at constant currency).

WMG reports that its music publishing streaming revenue reached $182 million in calendar Q3.

Adjusted for the impact of the CRB Rate Benefit of $17 million, the company’s music publishing streaming revenue increased 5.2% YoY at constant currency.

WARNER’S CALENDAR Q3 IN SUMMARY (% IN CONSTANT CURRENCY):

• Warner Music Group’s overall revenues were up 2.9% YoY at constant currency to $1.630 billion in calendar Q3.
• Excluding the BMG Termination, Digital License Renewal and the CRB Rate Benefit, WMG’s overall revenues were up 6% YoY on a normalized constant currency basis.
• Recorded music revenues were up 6.3% YoY to $1.338 billion;
• Within that figure, recorded music streaming revenues (including ad-supported and subscription) were up 6% YoY to $866 million.
• Recorded music subscription streaming revenues reached $645 million – up 10.6% YoY.
• Music publishing revenues – at Warner Chappell Music – were up 5% YoY to $295 million.

WMG: PROFITABILITY IN CALENDAR Q3

• WMG’s net income stood at $48 million in the calendar Q3 quarter, versus $154 million in the prior-year quarter.
• The firm’s quarterly adjusted OIBDA increased by 11% YoY to $353 million.

“Our results underscore the diversity and resilience of our business,” said Bryan Castellani, CFO of Warner Music Group.

“Our strong streaming performance, underpinned by positive industry trends, and combined with our cost discipline, resulted in robust cash flow generation.

“We are excited by the opportunities ahead, and look forward to delivering more culture-shaping music in 2025 and beyond.”Music Business Worldwide