Warner Music Group reported quarterly revenue was up 9% as of mid-year, as the third-largest U.S.-based music company beat Wall Street estimates for revenue and profit on big album releases by Ed Sheeran, Melanie Martinez others.
WMG reported revenue for its fiscal third quarter ending June 30 rose to $1.56 billion — analysts had expected $1.47 billion — driven by strong releases and a 15.5% uptick in music publishing revenue of $283 million. Streaming revenue rose by 9.5% overall and digital revenue was up 8.8% to $1.03 billion compared to the year ago quarter. Net profit edged slightly lower to $124 million from $125 million a year ago but still beat analysts’ expectations.
“We had a great release slate with lots of momentum and success, but at the same time our catalog has also delivered,” WMG Chief Executive Robert Kyncl said on a call with analysts. “We are firing on both engines.”
WMG’s stock was up 8% by mid-day trading in New York.
Executives said the current quarter is off to a good start with major releases from Lil Uzi Vert, Dua Lipa and the Barbie movie soundtrack, and upcoming releases from Zach Bryan and Charlie Puth.
“Our results show we’re gaining real traction,” Kyncl said, adding that as price increases from Spotify, YouTube and others filter in to WMG’s financials this quarter, the company can expect continued strength.
“We see these initial price increases as an encouraging start,” Kyncl said. “There’s no evidence that the services are experiencing elevated levels of customer churn. We believe the market will bear further price increases in the future, and we’re expecting that they’ll arrive on a more regular cadence than in the past. “
The growth in music publishing revenues was driven by a 26.4% uptick in digital revenue and 27.1% increase in streaming revenue, reflecting the impact of digital deal renewals and a revenue true-up of $9 million from the CRB. Mechanical revenue spike about 45% primarily due to a higher share of physical sales in the quarter.
Recorded revenue rose 7.8%, bolstered by a 5.6% increase in digital revenue and a 6.3% increase in streaming revenue on the stronger release schedule and growth in ad-supported revenue.
WMG prefers to use operating income before depreciation and amortization (OIBDA) as a metric to assess its overal business health, and OIBDA increased 18% to $275 million in the quarter compaired to $233 million a year ago. Adjusted OIBDA rose 16% to $297 million from $255 million a year ago.
Key WMG financial highlights:
- Total revenue rose 9% to $1.56 billion for the second quarter 2023, from $1.43 billion in the same quarter 2022.
- Net profit, or net income, was flat at $124 million this quarter compared to $125 million in the year ago quarter.
- Digital revenue rose 8.8% to $1.03 billion from $944 million in in the year ago quarter.
- Streaming revenue rose 9.5%
- Recorded music revenue rose 8% to $1.28 billion from $1.19 billion in the year ago quarter.
- Music publishing revenue rose 16% to $283 million from $245 million in the year ago quarter.
- Operating income was up 29% to $189 million from $146 million in the year ago quarter.
- OIBDA was up 18% to $275 million compared to $233 million in the year ago quarter, with OIBIDA margin of 17.6%, up from 16.3%.
