Warner Music Group posted its best-ever quarterly revenue in its 17-year history as a stand-alone company, it announced on Monday, powered by streaming, which led to double-digit growth in digital revenue.
Notably, its recorded music streaming growth was up 16% in constant currency, and publishing digital was up 36%, although overall its Warner Chappell division’s revenue was flat.
For the three months that ended Dec. 31, 2020, the company’s total revenue grew 6% or 4% in constant currency; digital revenue grew 17% or 16% in constant currency; net income was $99 million versus $122 million in the prior-year quarter, and OIBDA increased 13% to $267 million versus $236 million in the prior-year quarter. Adjusted OIBDA increased 18% to $282 million versus $240 million in the prior-year quarter, and adjusted EBITDA increased 19% to $297 million versus $249 million in the prior-year quarter.
Top-performing artists during the quarter included Dua Lipa, Ava Max, Johnny Hallyday and Ed Sheeran.
“Despite the impact of COVID, we generated the highest quarterly revenue in our 17-year history as a standalone company, growing 4% compared to the prior-year period, which was unaffected by COVID,” said WMG CEO Steve Cooper, CEO, Warner Music Group. “The strong double-digit growth in our digital revenue and direct-to-consumer business more than offset the continued disruption to our performance, merchandising, and physical revenue. We have some fantastic new music from amazing artists and songwriters on the way, and we continue to grow our investment in a new generation of talent, as well as inventing bold and memorable ways to impact global culture.”
“We are extremely proud of our first-quarter results, which were highlighted by significant growth over a number of key metrics when compared to a previous record-breaking quarter,” added Eric Levin, Executive Vice President and CFO, Warner Music Group. “While certain areas of our business remain challenged due to COVID, our core streaming business remains strong and our direct-to-consumer destinations and emerging streaming platforms have bolstered our performance. We are well-positioned for long-term growth.”
Revenue was up 6.3% (or up 3.8% in constant currency). The company’s digital revenue growth across recorded music and publishing was partially offset by a decline in recorded music physical and artist services and expanded-rights revenue and in publishing performance, mechanical and synchronization revenue, which reflects the impact from COVID, the statement notes; recorded music licensing revenue was flat.
The increase in revenue was primarily due to growth in streaming revenue, the Company’s largest and fastest-growing source of revenue, a favorable impact from exchange rates and strong physical releases and direct-to-consumer merchandising revenue, partially offset by COVID-related business disruption and the continued decline in physical revenue due to the transition to streaming. Digital revenue grew 16.9% (or 15.5% in constant currency), and represented 61.8% of total revenue, compared to 56.2% in the prior-year quarter.
Operating income was $196 million compared to $165 million in the prior-year quarter. OIBDA was $267 million, an increase from $236 million in the prior-year quarter and OIBDA margin increased 1.2 percentage points to 20.0% from 18.8% in the prior-year quarter.
Recorded music revenue was up 7.1% (or up 4.5% in constant currency). The revenue increase was primarily due to the continued growth in streaming revenue—which grew 17.5% over the prior-year quarter and 8.3% over the prior quarter and favorable exchange rates —which was partially offset by COVID-related business disruption in the current quarter. Growth in digital revenue was partially offset by declines in artist services and expanded-rights revenue and physical revenue. Licensing revenue was flat. , The decline in artist services and expanded-rights revenue was due to tour postponements and cancellations and lower tour merchandise revenue resulting from COVID-related business disruption, partially offset by increases in direct-to-consumer revenue driven by a strong holiday season as COVID restrictions limited brick-and-mortar shopping in Europe, the announcement states.
Recorded music operating income was $223 million, up from $191 million in the prior-year quarter and operating margin was up 1.6 percentage points to 19.2% versus 17.6% in the prior-year quarter.
Music publishing revenue increased 1.2% (or was down 0.6% in constant currency). Digital revenue growth was partially offset by decline in performance, mechanical and synchronization revenue. Digital revenue increased 35.6% (also 35.6% in constant currency) reflecting the continuing shift to streaming and timing of new deals with digital service providers, and represented 56.6% of total Music Publishing revenue versus 42.2% in the prior-year quarter. The decreases in performance revenue and synchronization revenue were primarily due to COVID-related business disruption. Mechanical revenue also decreased due to COVID-related business disruption and the continuing shift to streaming.
Music publishing operating income was $18 million, up 28.6% from $14 million in the prior-year quarter largely driven by revenue mix, partially offset by increases in amortization. Operating margin was 10.3%, up 2.2 percentage points from 8.1% in the prior-year quarter.