Warner Music Posts Strong Quarter With 23% Streaming Gain, $1 Billion Recorded-Music Revenue

Warner Music Group Logo
Courtesy of Warner Music Group

Warner Music Group posted strong results for the quarter that ended March 31, with $117 million in net income on revenues of $1.25 billion. While it’s hardly an apples-to-apples comparison, that’s a big improvement from the same quarter a year ago, when the company posted a $48 million net income loss.

Streaming soared 23.2% while recorded music showed a 16.8% bump to almost $1.06 billion (as opposed to $907 million in Q2 2020), and publishing also showed a big gain, climbing 15.7% to $192 million from $166 million year over year.

The company attributed some of the streaming growth to platforms such as Facebook, TikTok, and Peloton. Physical revenue soared 25.5% (or 19.2% in constant currency), primarily due to an increasing demand for vinyl as well as success from new releases, including the Yellow Monkey in Japan, as well as archival releases by Neil Young and Fleetwood Mac. Artist services and expanded-rights revenue increased on an as-reported basis by 2.6% and decreased 3.3% in constant currency, reflecting the impact of Covid on concert touring and live events, which was partially offset by an increase in direct-to-consumer merchandising revenue. Licensing revenue was down mainly due to lower broadcast fees resulting from Covd, partially offset by higher synchronization activity.

Top sellers included Dua Lipa, Michael Bublé, Ed Sheeran, Ava Max and the Yellow Monkey. 

Recorded Music operating income was $184 million, up from $36 million in the prior-year quarter and operating margin was up 13.4 percentage points to 17.4% versus 4.0% in the prior-year quarter. OIBDA increased to $235 million from $76 million in the prior-year quarter and OIBDA margin increased 13.8 percentage points to 22.2%. Adjusted OIBDA was $242 million versus $190 million in the prior-year quarter with Adjusted OIBDA margin up 2.0 percentage points to 22.9%.

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Music publishing revenue increased 15.7% (or 11.6% in constant currency). Digital and synchronization revenue growth was partially offset by declines in performance and mechanical revenue, which were largely Covid-related. Digital revenue increased 40.5% (or 33.3% in constant currency) reflecting the continuing growth in streaming and timing of new deals with digital service providers. Digital revenue represented 54.2% of total publishing revenue versus 44.6% in the prior-year quarter.  Synchronization revenue increased due to growth in motion picture and commercial income. The decrease in performance revenue was primarily due to COVID. Mechanical revenue also decreased due to the continuing shift to streaming.

Music Publishing operating income was $22 million, down 26.7% from $30 million in the prior-year quarter largely driven by revenue mix, higher employee costs and increases in amortization. Operating margin was 11.5%, down 6.6 percentage points from 18.1% in the prior-year quarter.