On the heels of announcing a plan to save $200m annually, Warner Music Group has reported its highest quarterly revenue since going public in June 2020.
For the three final months of 2023, revenue was up 17.5% to $1.75b, with the Recorded Music division bringing in $1.45b, up 17% from 2022. The quarter, the first in WMG’s fiscal year, included $68m from a licensing-agreement extension and the impact of the termination of a distribution agreement with BMG.
Streaming revenue for all of WMG was also up 17%, to $1.08b; Recorded Music was responsible for $887m of that total. WMG’s operating income increased 33.6% to $354m.
Singled out as the quarter’s successes were music from Jack Harlow, Kenya Grace, Cher, Myke Towers, Korea’s FIFTY FIFTY, and India’s King along with regional hit singles in Sweden, Denmark, Germany and Poland.
Music Publishing revenue increased 21.6% to $304m, driven by growth in digital and performance revenue. Digital revenue increased 31.5% and streaming revenue increased 32.2%. Performance revenue increased due to strong touring activity in Europe.
"Our strong Q1 results reflect double-digit revenue and adjusted OIBDA growth, as well as robust operating cash flow conversion," said WMG CFO Bryan Castellani. "The strength and resilience of our business was highlighted by an acceleration in Recorded Music streaming growth and continued momentum in Music Publishing, which saw its fifth consecutive quarter of increasing revenue growth. With a healthy and growing music ecosystem as our backdrop, we’re intensifying our focus on the highest-return opportunities while creating efficiencies across our business.”
"As we deliver our plan to accelerate our growth, we are becoming more efficient, increasing operating leverage and freeing up more funds to invest in music and tech, which in turn will drive further sustainable growth," said WMG CEO Robert Kyncl.
On a call with investors Thursday in which he reiterated points he made at the start of the year, Kyncl said the company is cutting staff and properties “to be more efficient and free up more funds to invest in music and tech.”
“We started to work on growth levers months back [and] our teams have started to gel,” Kyncl told the stock analysts. “Some of them will start generating results this year. [The focus is on] continued incremental improvements, steadily and forever. We’re first focused on internal efficiencies then out to third parties, the effect of which we’ll see in the next two or three years.”
Castellani said the plan to realize $200m in annualized savings by the end of fiscal 2025 (9/30/25) will allow the company to reinvest in “mission critical areas, ultimately driving shareholder value.”
He noted the impact in 2024 will be “fairly muted” but will “add flexibility to our long-term goals” and start to ramp up in 2025. Castellani also predicted the company will see margin expansion tick up through Q3 and Q4.
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