Warner Music Group Corp. Reports Results for Fiscal Third Quarter Ended June 30, 2025

Financial Highlights

• Revenue Reacceleration across Recorded Music and Music Publishing Supports Double-Digit Adjusted OIBDA Growth and Margin Expansion

• Recorded Music Streaming Performance Underpinned by Strong Market Share Gains in the U.S. and Chart Success across Geographies and Genres

• Recently Announced Restructuring Plan and Catalog Acquisition Joint Venture Expected to Provide Additional Capital for Reinvestment

For the three months ended June 30, 2025

• Total revenue increased 9%, or 7% in constant currency

• Net loss was $16 million compared to net income of $141 million in the prior-year quarter

• Operating income decreased 18% to $169 million versus $207 million in the prior-year quarter

• Adjusted OIBDA increased 18% to $373 million versus $316 million in the prior-year quarter, or 16% in constant currency

• Cash provided by operating activities decreased to $46 million versus $188 million in the prior-year quarter

Warner Music Group Corp. today announced its third-quarter financial results for the period ended June 30, 2025.

“This quarter we delivered massive chart hits, breakthrough stars, strong revenue growth, and market share gains…all of which show our strategy is working,” said Robert Kyncl, CEO, Warner Music Group. “As we continue to evolve our company, we're focusing on the artists, songwriters, and markets with the greatest potential, while expanding our iconic catalog, and building the dynamic teams and tools that will help our talent have the biggest global impact."

“Our strong performance this quarter reflects our commitment to investing in great music, driving greater efficiency, and creating long-term value for our artists, songwriters, and shareholders,” said Armin Zerza, CFO, Warner Music Group. “We’re focused on accelerating growth in our core business, expanding margins, and deploying capital in ways that strengthen our creative and financial impact.”

Total WMG

Revenue was up 8.7% (or 7.0% in constant currency). Digital revenue increased 5.3% (or 4.1% in constant currency), driven by an increase in streaming revenue of 4.0% (or 2.9% in constant currency). Recorded Music revenue includes $16 million of digital revenue from the settlement of certain related copyright infringement cases (the “Copyright Settlement”), and the prior-year quarter included $22 million of incremental Recorded Music streaming revenue from a digital service provider (“DSP”) for performance obligations satisfied in previous reporting periods (the “DSP True-Up Payments”). Consistent with the prior quarters, Recorded Music revenue growth was unfavorably impacted by the termination of the distribution agreement with BMG (the “BMG Termination”), which resulted in $14 million less Recorded Music revenue compared to the prior-year quarter. Excluding these items, total revenue increased 10.2% (or 8.5% in constant currency), and digital revenue increased 6.4% (or 5.2% in constant currency), driven by an increase in streaming revenue of 6.6% (or 5.5% in constant currency). Recorded Music streaming revenue increased 3.7% (or 2.6% in constant currency). Music Publishing streaming revenue increased 5.2% (or 4.1% in constant currency). The increase in total revenue was also driven by higher Recorded Music artist services and expanded-rights and licensing revenue, and growth across Music Publishing performance, synchronization and mechanical revenue, partially offset by lower Recorded Music physical revenue.

Operating income decreased 18.4% (or 19.9% in constant currency) to $169 million from $207 million primarily due to the factors affecting Adjusted OIBDA discussed below, as well as an increase in restructuring and impairment charges of $68 million compared to the prior-year quarter, an increase in amortization expenses of $12 million, higher non-cash stock-based compensation and other related costs of $5 million in the quarter due to the departure of our former Chief Financial Officer in the current year, executive transition costs of $4 million consisting of severance costs associated with the departure of our former CFO, and the impact of a $1 million net gain on divestitures in the prior-year quarter related to a divestiture of certain non-core owned and operated media properties.

Adjusted OIBDA increased 18.0% (or 15.8% in constant currency) to $373 million from $316 million and Adjusted OIBDA margin increased 1.8 percentage points to 22.1% from 20.3% in the prior-year quarter (or 1.7 percentage points to 22.1% from 20.4% in constant currency). The increases include the $9 million impact of the Copyright Settlement in Recorded Music in the quarter and the $12 million impact of the DSP True-Up Payments in the prior-year quarter. Excluding these items, Adjusted OIBDA increased 19.7% (or 17.4% in constant currency) and Adjusted OIBDA margin increased 1.8 percentage points to 21.8% from 20.0% (or 1.7 percentage points from 20.1% in constant currency). The increases in Adjusted OIBDA and Adjusted OIBDA margin were primarily driven by revenue mix, the impact of acquisitions, and cost savings from the 2024 Strategic Restructuring Plan, partially offset by the reinvestment of these savings in the Company’s business, including $7 million of incremental investment in technology.

Net loss was $16 million compared to net income of $141 million in the prior-year quarter. The net loss was due to the factors described above, as well as the impact of exchange rates on the Company’s Euro-denominated debt resulting in a $70 million loss in the quarter compared to a $7 million gain in the prior-year quarter, and realized and unrealized losses on hedging activity of $8 million in the quarter compared to a gain of $1 million in the prior-year quarter. The net loss was partially offset by a $25 million decrease in income tax expense, primarily due to a pre-tax loss in the quarter.

Basic and Diluted earnings per share were $(0.03) for both the Class A and Class B shareholders due to the net loss attributable to the Company in the quarter of $16 million.

As of June 30, 2025, the Company reported a cash balance of $527 million, total debt of $4.363 billion and net debt (defined as total debt, net of deferred financing costs, premiums and discounts, minus cash and equivalents) of $3.836 billion. Total debt includes $302 million of subsidiary debt acquired in our acquisition of Tempo Music Holdings, LLC (“Tempo”). The debt is secured only by certain music rights owned by Tempo and is nonrecourse to the Company and its subsidiaries, other than Tempo.

Cash provided by operating activities decreased 76% to $46 million in the quarter compared to $188 million in the prior-year quarter. The decrease was largely a result of higher A&R spend and other movements in working capital. Free Cash Flow, as defined below, decreased to $7 million from $160 million in the prior-year quarter, primarily due to the factors affecting cash provided by operating activities described above and due to an increase in capital expenditures of 39% to $39 million from $28 million in the prior-year quarter, driven by investments in technology.

Recorded Music

Recorded Music revenue was up 8.2% (or 6.4% in constant currency) driven by increases across digital, artist services and expanded-rights and licensing revenue, partially offset by a decrease in physical revenue. Digital revenue was up 5.3% (or 4.1% in constant currency) and streaming revenue was up 3.7% (or 2.6% in constant currency). The quarter includes $16 million of digital revenue from the Copyright Settlement, while the prior-year quarter includes $22 million of incremental Recorded Music streaming revenue from the DSP True-Up Payments. Recorded Music revenue growth was unfavorably impacted by the BMG Termination, which resulted in $14 million less revenue compared to the prior-year quarter ($10 million in physical and $4 million in streaming). Adjusted for these items, total revenue was up 10.1% (or 8.3% in constant currency) and digital revenue was up 6.7% (or 5.4% in constant currency). Streaming revenue reflects growth in subscription revenue of 5.3% (or 4.2% in constant currency), partially offset by a decline in ad-supported revenue of 0.9% (or 1.8% in constant currency). Excluding the $4 million impact of the BMG Termination in the quarter and the $22 million impact of the DSP True-Up Payments in the prior-year quarter, streaming revenue increased 6.9% (or 5.8% in constant currency) and subscription revenue grew 9.8% (or 8.5% in constant currency). The increase in subscription revenue reflects positive market share trends and chart performance, while the decrease in ad-supported revenue was driven by a soft overall ad environment. Licensing revenue increased 23.3% (or 19.4% in constant currency), driven by licensing deals primarily in the U.K. and China, and timing of other copyright infringement settlements. Artist services and expanded-rights revenue increased 22.6% (or 19.6% in constant currency) due to higher concert promotion revenue, primarily in France and Spain. Physical revenue decreased 0.8% (or 4.0% in constant currency) as growth from strong releases in Korea and Japan was offset by the $10 million impact of the BMG Termination. Excluding the BMG Termination, physical revenue grew 8.2% (or 4.4% in constant currency).Top sellers in the quarter included BAEKHYUN, ROSÉ, Bruno Mars, Grateful Dead and Teddy Swims.

Recorded Music operating income decreased 12.6% (or 14.5% in constant currency) to $201 million from $230 million in the prior-year quarter, and operating margin was down 3.6 percentage points to 14.8% versus 18.4% in the prior-year quarter. The decrease in operating income was due to the factors affecting Adjusted OIBDA discussed below, as well as an increase in restructuring and impairment charges of $67 million compared to the prior-year quarter, which includes impairment losses related to long-lived assets associated with certain of the Company’s non-core e-tailer operations, and higher amortization expenses of $3 million in the quarter attributable to acquisitions of music-related assets, partially offset by lower non-cash stock-based compensation and other related expenses of $2 million in the quarter.

Adjusted OIBDA increased 14.2% (or 12.2% in constant currency) to $321 million from $281 million and Adjusted OIBDA margin increased 1.2 percentage points to 23.7% from 22.5% in the prior-year quarter (the same in constant currency). The increases include the $9 million impact of the Copyright Settlement in the quarter and the $12 million of DSP True-Up Payments in the prior-year quarter. Excluding these items, Adjusted OIBDA increased 16.0% (or 13.9% in constant currency) and Adjusted OIBDA margin increased 1.2 percentage points to 23.3% from 22.1% (or 1.1 percentage points from 22.2% in constant currency). The increases in constant currency Adjusted OIBDA and Adjusted OIBDA margin were primarily driven by savings from the 2024 Strategic Restructuring Plan, of which a portion has been reinvested in the Company’s business, partially offset by revenue mix.

Music Publishing

Music Publishing revenue increased 10.2% (or 9.4% in constant currency). The increase was driven by growth across digital, performance, synchronization and mechanical revenue. Digital revenue increased 5.2% (or 4.6% in constant currency) and streaming revenue increased 5.2% (or 4.1% in constant currency), driven by the impact of digital deal renewals, primarily in the U.S. Performance revenue increased 11.5% (or 9.4% in constant currency) attributable to growth from concerts, radio and live events primarily in Europe. Synchronization revenue increased 28.6% (the same in constant currency) due to the timing of other copyright infringement settlements, higher television and commercial licensing activity, and the $3 million impact of the Company’s acquisition of Tempo. Mechanical revenue increased 23.1% (or 14.3% in constant currency).

Music Publishing operating income increased 13.2% (the same in constant currency) to $60 million from $53 million in the prior-year quarter and operating margin increased 0.5 percentage points to 17.9% from 17.4% in the prior-year quarter. The increase in operating income was driven by the same factors affecting Adjusted OIBDA discussed below, partially offset by an increase in amortization expense of $9 million in the quarter related to the impact of acquisitions.

Music Publishing Adjusted OIBDA increased 21.5% (or 20.0% in constant currency) to $96 million from $79 million in the prior-year quarter. Adjusted OIBDA margin increased 2.7 percentage points to 28.6% from 25.9% in the prior-year quarter (or 2.5 percentage points to 28.6% from 26.1% in constant currency). The increases in Adjusted OIBDA and Adjusted OIBDA margin were primarily driven by revenue mix and the impact of acquisitions.

Recent Announcements

In addition, the Company also announced today that its Board of Directors declared a regular quarterly cash dividend of $0.19 per share on the Company’s Class A Common Stock and Class B Common Stock. The dividend is payable on September 3, 2025, to stockholders of record as of the close of business on August 20, 2025.

Financial details for the quarter can be found in the Company’s current Quarterly Report on Form 10-Q for the period ended June 30, 2025, which will be filed this morning with the Securities and Exchange Commission.

This morning management will be hosting a conference call to discuss the results at 8:30 A.M. EST. The call will be webcast on www.wmg.com.

About Warner Music Group

With a legacy extending back over 200 years, Warner Music Group today is home to an unparalleled family of creative artists, songwriters, and companies that are moving culture across the globe. At the core of WMG’s Recorded Music division are four of the most iconic companies in history: Atlantic, Elektra, Parlophone and Warner Records. They are joined by renowned labels such as TenThousand Projects, 300 Entertainment, Asylum, Big Beat, Canvasback, East West, Erato, FFRR, Fueled by Ramen, Nonesuch, Reprise, Rhino, Roadrunner, Sire, Spinnin’ Records, Warner Classics and Warner Music Nashville. Warner Chappell Music - which traces its origins back to the founding of Chappell & Company in 1811 - is one of the world's leading music publishers, with a catalog of more than one million copyrights spanning every musical genre from the standards of the Great American Songbook to the biggest hits of the 21st century.

"Safe Harbor" Statement under Private Securities Litigation Reform Act of 1995

This communication includes forward-looking statements that reflect the current views of Warner Music Group about future events and financial performance. Words such as "estimates," "expects," "anticipates," "projects," "plans," "intends," "believes," "forecasts" and variations of such words or similar expressions that predict or indicate future events or trends, or that do not relate to historical matters, identify forward-looking statements. All forward-looking statements are made as of today, and we disclaim any duty to update such statements. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them. However, we cannot assure you that management's expectations, beliefs and projections will result or be achieved. Investors should not rely on forward-looking statements because they are subject to a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from our expectations. Please refer to our Form 10-K, Form 10-Qs and our other filings with the U.S. Securities and Exchange Commission concerning factors that could cause actual results to differ materially from those described in our forward-looking statements.

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Supplemental Disclosures Regarding Non-GAAP Financial Measures

We evaluate our operating performance based on several factors, including the following non-GAAP financial measure:

Adjusted OIBDA

We evaluate our operating performance based on several factors, including our primary financial measure of operating income (loss) before non-cash depreciation of tangible assets and non-cash amortization of intangible assets adjusted to exclude the impact of non-cash stock-based compensation and other related expenses and certain items that affect comparability including but not limited to gains or losses on divestitures and expenses related to restructuring and transformation initiatives (“Adjusted OIBDA”). We consider Adjusted OIBDA to be an important indicator of the operational strengths and performance of our businesses. However, a limitation of the use of Adjusted OIBDA as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our businesses. Accordingly, Adjusted OIBDA should be considered in addition to, not as a substitute for, operating income (loss), net income (loss) attributable to Warner Music Group Corp. and other measures of financial performance reported in accordance with United States generally accepted accounting principles (“U.S. GAAP”). In addition, our definition of Adjusted OIBDA may differ from similarly titled measures used by other companies.

Constant Currency

As exchange rates are an important factor in understanding period-to-period comparisons, we believe the presentation of revenue and Adjusted OIBDA on a constant-currency basis in addition to reported results helps improve the ability to understand our operating results and evaluate our performance in comparison to prior periods. Constant-currency information compares revenue and Adjusted OIBDA between periods as if exchange rates had remained constant period over period. We use revenue and Adjusted OIBDA on a constant-currency basis as one measure to evaluate our performance. We calculate constant-currency by calculating prior-year revenue and Adjusted OIBDA using current-year foreign currency exchange rates. Revenue and Adjusted OIBDA on a constant-currency basis should be considered in addition to, not as a substitute for, revenue and Adjusted OIBDA reported in accordance with U.S. GAAP. Revenue and Adjusted OIBDA on a constant-currency basis, as we present them, may not be comparable to similarly titled measures used by other companies and are not a measure of performance presented in accordance with U.S. GAAP.