Warner Music Group (WMG) Q1 2025 earnings summary

Executive summary

• Net income rose 25% to $241 million despite a 5% revenue decline to $1.67 billion, driven by catalog performance, new releases, and global subscriber trends.

• Achieved year-over-year double-digit growth in subscription streaming revenue and Adjusted EBITDA, with increased A&R investment and strong performance across new releases and catalog.

• Announced a new multi-year agreement with Spotify covering both recorded music and publishing, and acquired a controlling stake in Tempo Music Investments.

• Strategic acquisitions and partnerships expanded music rights and global reach.

• Strategic Restructuring Plan continued, with $27 million in restructuring and impairment charges in the quarter.

Financial highlights

• Total revenue decreased 5% year-over-year to $1.67 billion, but adjusted revenue rose 4%.

• Adjusted OIBDA dropped 20% to $363 million; margin fell to 21.8% from 25.8%.

• Cash from operations increased 13% to $332 million; free cash flow up 12% to $296 million.

• Physical revenue increased 8% (21% excluding BMG impact); ad-supported streaming declined 7%.

• Net income: $241 million, up 25% year-over-year.

Outlook and guidance

• Reaffirmed full-year guidance for recorded music subscription streaming revenue and operating cash flow conversion.

• Unable to reaffirm margin expansion target for this fiscal year due to persistent FX headwinds.

• Multi-year goal remains annual margin expansion of ~100 basis points and operating cash flow conversion of 50%-60% of Adjusted EBITDA.