While its total and digital revenue were up, Warner Music Group suffered a significant dip in the quarter that ended June 30, 2018, with its operating income at $28 million compared to $51 million in the same period last year; OIBDA dropped to $99 million compared with $115 million. Total revenue grew 4.5% (or 1.9% in constant currency) while digital revenue was up 16.1% (14.1% in constant currency), representing 60.1% of total revenue, compared with 54.1% in the same quarter last year. Net income was $321 million compared with $143 million in the same period in 2017.

The report notes that the net income increase was “largely attributable to a $317 million gain (net of tax) on the sale of 75% of the company’s Spotify shares, announced in May, and foreign currency gains on Euro-denominated debt.” CEO Steve Cooper announced during the call that the company has sold its remaining shares in the streaming service, realizing $504 million, $126 million of which will be distributed to artists.

However, CEO Steve Cooper noted, the company’s year-to-date revenue is up 12%, or 7% in constant currency — “a far better barometer than looking at this .  “While streaming continues to fuel our growth, we are exploring a wide array of creative and commercial opportunities in order to position ourselves for long-term success,” he said.

“We are pleased with our revenue growth in the context of a very difficult prior-year comparison,” added EVP and CFO Eric Levin.  “The health of our business is evidenced by our very strong cash generation.”

The company posted solid earnings in its second-quarter report.

According to the announcement, the company’s growth in recorded-music digital and licensing revenue and music publishing digital and synchronization revenue was dogged by a decline in recorded-music physical and artist services and expanded-rights revenue and music publishing performance and mechanical revenue.  Revenue grew in the U.S., Asia and Latin America and declined in Europe due to a decrease in physical revenue and the impact of stronger releases in the prior-year quarter.

Recorded music operating income was $67 million compared with $77 million in the prior-year quarter and operating margin declined 1.6 percentage points to 8.4%.  Top sellers included “The Greatest Showman” soundtrack album, Ed Sheeran, Cardi B, Bruno Mars and Dua Lipa — only Cardi B’s album was a 2018 release.

Music publishing revenue rose 6.0% (or 3.9% in constant currency). Growth in digital revenue (led by streaming) and in synchronization revenue was partially offset by a decline in performance and mechanical revenue. Music Publishing operating income was $5 million, compared with $6 million in the prior-year quarter.

The company said the decline in operating income, OIBDA and OIBDA margin was largely the result of higher SG&A (sales, general & administrative expenses), “including higher variable compensation expense, primarily attributable to the Company’s deferred compensation plan based on an increase in the fair value of the Company’s equity.”