Photo credit: Tyrone LebonWMG's major sellers in calendar Q2 included Dua Lipa (pictured), Benson Boone, Zach Bryan, Teddy Swims, and Twenty One Pilots
MBW’s Stat Of The Week is a series in which we highlight a data point that deserves the attention of the global music industry. Stat Of the Week is supported by music data analytics firm Chartmetric.
Warner Music Group has published its financial results for the three months ended June 30, 2024 (calendar Q2 – the company’s fiscal Q3).
According to the company’s fiscal Q3 (calendar Q2) results, WMG saw its quarterly global company-wide revenues reach USD $1.554 billion (across recorded music, music publishing, and other activities).
WMG noted in its SEC filing on Wednesday (August 7) that “consistent with the prior quarter”, the company’s recorded music digital revenue growth was unfavorably impacted by the termination of its distribution agreement with BMG, which, it said, resulted in $26 million less revenue compared to the prior-year quarter.
The company also noted that there was a $3 million “unfavorable impact” within its recorded music streaming revenue compared to the prior year quarter due to a renewal with one of its digital partners.
For WMG’s Publishing division, the company reports that its digital revenue growth was unfavorably impacted by a $7 million benefit in the prior-year quarter “due to a ruling by the Copyright Royalty Board in Phonorecords III upholding higher percentage of revenue US mechanical royalty rates”.
Excluding the BMG Termination, the Digital License Renewal, and the CRB Rate Benefit, WMG’s total revenue was up 3.1% YoY at constant currency.
(Including the BMG Termination, the Digital License Renewal, and the CRB Rate Benefit, WMG’s company-wide revenue in calendar Q2 was up 0.6% YoY at constant currency.
RECORDED MUSIC
Warner Music Group’s recorded music revenues reached $1.251 billion in calendar Q2, down 1.1% YoYat constant currency, and driven, according to WMG, by “decreases in artist services and expanded-rights, physical and licensing revenue, partially offset by growth in digital revenue”.
Excluding the impact from the BMG Termination and the Digital License Renewal detailed above, WMG’s recorded music revenue increased 1.2% YoY at constant currency.
Warner’s recorded music streaming revenue (including ad-supported and subscription) was up 10.2% YoYon a constant currency basis (adjusted for the impact of the BMG Termination and the Digital License Renewal) to $863 million (see below).
WMG also 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 $640 million in calendar Q2. Adjusted for the BMG Termination and the Digital License Renewal, revenues from recorded music subscription streaming were up 13.7% YoY at constant currency.
WMG generated $223 million in ad-supported recorded music streaming revenues in calendar Q2, which was up 0.9% YoYat constant currency.
Major sellers in calendar Q2 included Dua Lipa, Benson Boone, Zach Bryan, Teddy Swims, and Twenty One Pilots.
Elsewhere in WMG’s recorded music business, the company generated $90 million from Licensing, which decreased 1.1% YoY at constant currency, driven, according to WMG, “by the timing of copyright infringement settlements”.
Physical revenue, meanwhile, decreased 4% YoY at constant currency to $120 million, primarily driven by the “timing of releases and strong US releases in the prior-year quarter,” WMG said on Wednesday.
Artist services and expanded-rights revenue decreased 26% YoY at constant currency to $159 million. WMG said that this performance was primarily due to “lower merchandising revenue, lower concert promotion revenue primarily related to Japan and France, 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”.
“Our strong subscription streaming growth in Q3 was driven by the performance of our music and healthy industry trends. We’re nurturing the next generation of artists and songwriters, creating fresh impact for our iconic catalog, and working with our partners to increase the value of music.”
“Our strong subscription streaming growth in Q3 was driven by the performance of our music and healthy industry trends,” said Warner Music Group CEO Robert Kyncl on Wednesday.
“We’re nurturing the next generation of artists and songwriters, creating fresh impact for our iconic catalog, and working with our partners to increase the value of music.
“Our commitment to long-term artist development, combined with a flatter structure in recorded music, will enable us to super-serve talent and set WMG up for sustained future growth.”
Music Publishing
Warner’s global music publishing division – Warner Chappell Music – saw its quarterly revenues increase by 8.9% YoY at constant currency to $305 million.
Excluding the impact from the CRB Rate Benefit detailed earlier, WMG’s Music Publishing revenue increased 11.7% YoY at constant currency.
Music publishing streaming revenue increased7.9% YoY at constant currency to $192 million. Excluding the CRB Rate Benefit in the prior-year quarter, streaming revenue increased 12.3% YoY at constant currency, “reflecting continued market growth, expansion of [WMG’s] publishing catalog and timing of payments”.
Performance revenue increased 33.3% YoY at constant currency to $52 million due to an increase in touring activity outside the US, plus US radio activity.
Mechanical revenue decreased18.8% YoY at constant currency, primarily driven by lower physical sales, WMG said on Wednesday.
Synchronization revenue, meanwhile, grew 2.4% YoY at constant currency, driven, according to WMG, by “higher international commercial licensing activity, partially offset by the timing of copyright infringement settlements in the US”.
WARNER’S CALENDAR Q2 2024 IN SUMMARY (% IN CONSTANT CURRENCY):
Warner Music Group’s overall revenues were up 0.6% YoY at constant currency to $1.554 billion in calendar Q2;
Excluding the BMG Termination, Digital License Renewal and CRB Rate Benefit detailed in WMG’s earnings release, total revenue was up3.1% YoYon a constant currency basis.
Recorded music revenues (adjusted for the BMG Termination and Digital License Renewal) were up1.2% YoY on a constant currency basis to $1.251 billion;
Within that figure, recorded music streaming revenues were up 10.2% YoY at constant currency (adjusted for the BMG Termination, Digital License Renewal) to $863 million.
Recorded music subscriptionstreaming revenues were up 13.7% YoY on a constant currency basis (adjusted for the BMG Termination, Digital License Renewal) to $640 million.
Music publishing revenues – at Warner Chappell Music – were up 11.7% YoYat constant currency (excluding the impact from the CRB Rate Benefit) to $305 million.
WMG: PROFITABILITY IN CALENDAR Q2 2024
WMG’s net income stood at $141 million versus $124 million in the prior-year quarter.
Operating income stood at $207 million versus $189 million in the prior-year quarter.
The firm’s quarterly adjusted OIBDA was $316 million versus $297 million in the prior-year quarter, up 8% YoY at constant currency.
“Looking ahead, we are focused on delivering a strong close to the year. The industry remains healthy and we continue to position ourselves for long-term success.”
Bryan Castellani, Warner Music Group
“Our Q3 results were highlighted by strong margin expansion and operating cash flow growth, reflecting robust streaming performance and disciplined cost management,” said Bryan Castellani, CFO, Warner Music Group.
“Looking ahead, we are focused on delivering a strong close to the year. The industry remains healthy and we continue to position ourselves for long-term success.”
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