Warner Music Group posted strong fiscal second-quarter financial results this morning, with total revenue up 16.7% (10.4% in constant currency) and digital revenue up 24.6% (19.7% in constant currency). Digital revenue represented 56.8% of total revenue, compared to 53.2% in the prior-year quarter.
The company also announced that it has sold 75% of its shares in Spotify, worth around $400 million.
“We’re having another excellent year with strong momentum around the world in both Recorded Music and Music Publishing,” said Steve Cooper, Warner Music Group’s CEO. “We’re investing heavily in A&R, digital innovation and the transformation of our operations to ensure that we are positioned for long-term success.”
“We showed strong revenue and OIBDA growth in our second quarter,” added Eric Levin, Warner Music Group’s Executive Vice President and CFO. “This is our eleventh consecutive quarter of year-over-year revenue growth and we’re proud of our ability to deliver robust results on a consistent basis.”
Growth in Recorded Music digital, physical and licensing revenue and all segments of Music Publishing revenue were partially offset by a decline in Recorded Music artist services and expanded-rights revenue. Revenue increased in all regions.
Operating income was $83 million compared to $78 million in the same quarter last year, while OIBDA rose 7.8% to $152 million from $141 million. According to the release, the increase in operating income and OIBDA was largely the result of higher revenue partially offset by restructuring costs and an increase in facilities costs related to the Company’s Los Angeles office consolidation.
Net loss was $1 million compared to net income of $20 million in the prior-year quarter and Adjusted net income was $28 million compared to Adjusted net income of $25 million in the prior-year quarter. The net loss was primarily attributable to a loss on extinguishment of debt of $23 million related to the partial redemption of the Company’s 6.75% Senior Notes, and higher non-cash tax expense in the quarter related to a one-time tax benefit in the prior-year quarter, offset by higher operating income.
Recorded Music revenue grew 15.3% (9.1% in constant currency), although rowth in digital, physical and licensing revenue was partially offset by a decline in artist services and expanded-rights revenue. Licensing revenue rose due to higher broadcast fee income and greater synchronization activity. Recorded music operating income was $80 million up from $69 million in the prior-year quarter, and operating margin was flat at 10.1%. Top sellers included Ed Sheeran, “The Greatest Showman” soundtrack album, Bruno Mars, Dua Lipa and the Japanese rock band Wanima.
Music publishing revenue rose 20.0% (13.7% in constant currency) and grew in all segments – digital, performance, synchronization and mechanical – although operating income was flat at $41 million.