Warner Music Group has announced its fourth-quarter and full-year financial results for the period ending September 30, 2024.
Total revenue increased by 6.5% year-on-year to $6.43 billion (all figures are in constant currency).
One-off elements in the results included $68 million of Recorded Music revenue from a licensing agreement extension for an artist’s catalogue. In addition, revenue growth was unfavourably impacted by the termination of Warner Music’s streaming partnership with BMG, which resulted in $86m of lower revenue, though that was partially offset by $16m in incremental streaming revenue from a digital licence renewal with a digital partner.
Operating income increased by $33m to $823m. Adjusted OIBDA increased 16% to $1.43 billion
In the results for the financial year, Recorded Music revenue was up 5.6%, largely driven by growth in licensing revenue (30.1%), as well as growth in sync and other licensing revenue. Excluding the impact of the licensing extension, the digital licence renewal and the BMG termination, Recorded Music revenue was up 5.7%.
Digital revenue was up 6.4%, largely driven by growth in streaming revenue of 7.3%. Adjusted for the impact of the BMG termination and the digital licence renewal, Warner Music Recorded Music streaming revenue was up 9.6%.
Streaming revenue reflects growth in subscription revenue of 9.2% and growth in ad-supported revenue of 2.3% (or, respectively, 12.4% and 2.6% once those one-off factors are taken into account).
Physical revenue increased 2.2%, driven by the strength of new releases in Japan (primarily from Twice and Aespa). Artist services and expanded-rights revenue decreased 8.4%, reflecting a decrease in revenue related to the exit of the company’s owned and operated media properties announced as part of the strategic restructuring plan, as well as lower merchandising revenue.
Major sellers in the year included Benson Boone, Zach Bryan, Teddy Swims, Dua Lipa and Charli XCX.
Our performance this quarter and this year demonstrated our strength and adaptability in a thriving, fast-moving market
Robert Kyncl
Music publishing revenue increased by 11.0%. Excluding the impact from the CRB Rate Benefit of $24m in the prior year, publishing revenue increased 13.5%. The increase was driven by growth in digital, performance and sync revenue, partially offset by lower mechanical revenue.
During Q4, overall revenue was up 2.9%. Recorded Music revenue was up 5.6% (5.7% if excluding the one-off factors). Streaming revenue in the quarter increased by 2.5% (or 6% if one-off factors are excluded). Subscription revenue was up 10.6% once adjusted for the BMG termination and digital renewal.
Music Publishing revenue decreased 1.0% in Q4, as a result of lower digital and mechanical revenue, partially offset by an increase in sync revenue. Excluding the impact from the CRB Rate Benefit of $17m in the prior-year quarter, publishing revenue increased 5.0%.
"Our performance this quarter and this year demonstrated our strength and adaptability in a thriving, fast-moving market," said Robert Kyncl, CEO, Warner Music Group. "We continue to evolve WMG, based on the principle that simplicity and focus drive higher intensity and global impact. This is enhancing our ability to attract original artists and songwriters at all stages of their careers, helping them realise their musical visions, and grow passionate, loyal fanbases."
"Our results underscore the diversity and resilience of our business," said Bryan Castellani, CFO of Warner Music Group. "Our strong streaming performance, underpinned by positive industry trends, and combined with our cost discipline, resulted in robust cash flow generation. We are excited by the opportunities ahead, and look forward to delivering more culture-shaping music in 2025 and beyond."
Robert Kyncl on Atlantic, M&A and catalogue
During the earnings call, Kyncl discussed the changes at Atlantic, with Elliot Grainge now in charge.
“While this kind of transition is never easy, this was a seamlessly executed handover,” said Kyncl. “The team has delivered first-class results for priority projects, while bringing in fresh ideas, onboarding dynamic executives, and attracting exciting new artists.
“With a digitally native approach, the Atlantic team will expand and diversify our artist roster, and increase the volume of releases.”
Atlantic has seen global success at the start of the major’s fiscal year with Apt, the Bruno Mars and Rosé collaboration.
Meanwhile, Coldplay recently scored their first US No.1 in a decade, Charli XCX secured multiple Grammys nominations and Artemas reached a billion streams with I Like The Way You Kiss Me. Forrest Frank and Jordan Adetunji received their first Grammy nominations.
“Elliot and his team have an impressive ability to discover extraordinary talent across multiple genres, and find fresh ways to help both established and emerging artists stand out from the crowd,” said Kyncl.
Warner Music is set for a strong start from Linkin Park’s From Zero, which is heading for No.1 in the UK.
With a digitally native approach, the Atlantic team will expand and diversify our artist roster
Robert Kyncl
“As I’ve said many times, the power of new releases drives engagement around an artist’s catalogue… and vice versa,” said Kyncl. “We create a virtuous cycle of consumption that fuels an uplift across the artist’s entire body of work. For example, when Linkin Park’s new single, The Emptiness Machine, dropped in September and the band’s new album was announced, their streams jumped by half a billion compared to the same quarter last year.”
The major’s catalogue and distribution division have been reorganised to operate on a global basis.
Warner Music is also increasing its focus on the Indian market, where Kyncl said the major is “well positioned to keep taking market share, as India continues its explosive growth”.
With continuing streaming penetration in emerging markets, Kyncl suggested that music subscriber growth should remain healthy for years to come.
The Warner Music CEO also said that the M&A strategy will now target complementary “bolt-on” acquisitions to advance their focus on A&R investment, IP and catalogues.
“Our focus on efficiency has freed up capital, enabling us to increase our investments in growth opportunities,” said Kyncl. “As we previously promised, we’ve increased our A&R investment by approximately 11% in fiscal 2024, as we continue to sign new artists and songwriters and acquire IP and catalogues… all while driving our digital transformation. As part of our investment strategy, we will consider bolt-on acquisitions that accelerate our progress, while meeting our return thresholds.”
“We’re very optimistic about the future at Warner Music Group,” added Kyncl. “We have the right team and strategy to deliver long-term profitable growth in a dynamic and thriving industry. We continue to build strong, mutually beneficial relationships with our partners that grow the value of music.
“With both subscriber growth and opportunities for wholesale price increases, the formula for streaming growth is strong; and there is plenty of room for acceleration.”
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