Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 9, 2024


Warner Music Group Corp. (Exact name of Registrant as specified in its charter)

Delaware

(State or other jurisdiction

of incorporation)

001-32502

(Commission

File Number)

13-4271875

(I.R.S. Employer

Identification No.)

1633 Broadway,

New York, NY

(Address of principal executive offices)

10019

(Zip Code)

Registrant’s telephone number, including area code: (212) 275-2000

____________________________________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, $0.001 par value per share

WMG

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On May 9, 2024, Warner Music Group Corp. issued an earnings release announcing its results for the quarter ended March 31, 2024, which is furnished as Exhibit 99.1 hereto.

This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference to such filing.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits.


Exhibit No.						Description
99.1						Earnings release issued by Warner Music Group Corp. on May 9 , 2024.

104						Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	WARNER MUSIC GROUP CORP.

Date: May 9, 2024	By:	/s/ Bryan Castellani
		Bryan Castellani
		Executive Vice President and Chief Financial Officer

WARNER MUSIC GROUP CORP. REPORTS RESULTS FOR FISCAL SECOND QUARTER ENDED MARCH 31, 2024

Financial Highlights

•Solid Results Driven by Growth Across Recorded Music and Music Publishing

•Recorded Music Results Underpinned by an Acceleration in Subscription Streaming

•Music Publishing Delivered Revenue Growth of 19%

•Reiterating Full-Year Operating Cash Flow Conversion Guidance of 50-60%

For the three months ended March 31, 2024

•Total revenue increased 7%, the same in constant currency

•Net income was $96 million versus $37 million in the prior-year quarter

•Operating income decreased 4% to $119 million versus $124 million in the prior-year quarter

•Adjusted OIBDA increased 9% to $312 million, versus $286 million in the prior-year quarter, the same in constant currency

•Cash used in operating activities increased to $31 million, versus $6 million in the prior-year quarter

NEW YORK, New York, May 9, 2024—Warner Music Group Corp. today announced its second-quarter financial results for the period ended March 31, 2024.

"This quarter we saw a healthy, dynamic mix of hits across a range of genres, geographies, and generations," said Robert Kyncl, CEO of Warner Music Group. "With our commitment to artist and songwriter development as our guiding principle, we continue to discover great talent, build sustainable careers, champion the value of music, and grow the catalog of tomorrow. We are positioning WMG for long term growth and look forward to delivering successful music in the second half of 2024 and beyond."

"Our performance in the quarter was driven by an acceleration in Recorded Music subscription streaming growth and continued momentum in Music Publishing," said Bryan Castellani, CFO, Warner Music Group. "Encouraged by the continued growth in engagement and value of music, we remain focused on delivering on our strategy and driving long-term shareholder value."

Total WMG


Total WMG Summary Results
(dollars in millions)
	For the Three Months Ended March 31, 2024		For the Three Months Ended March 31, 2023		% Change		For the Six Months Ended March 31, 2024		For the Six Months Ended March 31, 2023		% Change
	(unaudited)		(unaudited)				(unaudited)		(unaudited)
Revenue	$	1,494	$	1,399	7	%	$	3,242	$	2,887	12	%
Recorded Music revenue	1,189		1,143		4	%	2,634		2,382		11	%
Music Publishing revenue	306		257		19	%	610		507		20	%
Operating income	119		124		-4	%	473		389		22	%
Adjusted OIBDA(1)	312		286		9	%	763		621		23	%
Net income	96		37		—	%	289		161		80	%
Net cash (used for) provided by operating activities	(31)		(6)		—	%	262		203		29	%
Free Cash Flow	(57)		(41)		39	%	207		147		41	%

(1) See "Supplemental Disclosures Regarding Non-GAAP Financial Measures" at the end of this release for details regarding this measure.

Revenue was up 6.8% (or 6.9% in constant currency). Consistent with the prior quarter, Recorded Music digital revenue growth was unfavorably impacted by the termination of the distribution agreement with BMG (the “BMG Termination”), which resulted in $22 million less revenue compared to the prior-year quarter, and a $4 million unfavorable impact within Recorded Music streaming revenue due to a renewal with one of the Company’s digital partners (the “Digital License Renewal”), which resulted in upfront revenue recognition in the prior quarter. Excluding the BMG Termination and the Digital License Renewal, total revenue was up 8.8% (or 9.0% in constant currency).

Digital revenue increased 9.9% (or 10.2% in constant currency) and streaming revenue increased 10.7% (or 11.1% in constant currency). Recorded Music streaming revenue increased 7.1% (or 7.7% in constant currency); however, adjusted for the impact of the BMG Termination and the Digital License Renewal, Recorded Music streaming revenue was up 10.5% (or 11.1% in constant currency). Music Publishing streaming revenue increased 30.3% (or 29.4% in constant currency). Revenue increases in the quarter were also driven by growth in Recorded Music licensing revenue and Music Publishing performance and synchronization revenue, partially offset by lower Recorded Music physical and artist services and expanded-rights revenue.

Operating income decreased 4.0% (or 3.3% in constant currency) from $124 million to $119 million primarily due to the factors affecting Adjusted OIBDA discussed below, as well as $95 million of restructuring and non-cash impairment charges, which includes severance costs of $46 million and an impairment loss of $50 million due to the exit of certain non-core owned and operated media properties pursuant to the Company’s restructuring plan announced in February 2024 (the “Strategic Restructuring Plan”), compared to $41 million of restructuring charges in the prior-year quarter, and $5 million of incremental expenses related to transformation initiatives and other related costs. The decrease in operating income was partially offset by lower non-cash stock-based compensation of $11 million, lower amortization expenses due to certain intangible assets becoming fully amortized of $4 million, and a $14 million net gain on a divestiture of certain music publishing rights in the quarter.

Adjusted OIBDA increased 9.1% from $286 million to $312 million (the same in constant currency) and Adjusted OIBDA margin increased 0.5 percentage points to 20.9% from 20.4% in the prior-year quarter (or increased 0.4 percentage points to 20.9% from 20.5% in constant currency). Adjusted OIBDA growth was primarily due to strong operating performance and $12 million of savings from the March 2023 restructuring plan (the “2023 Restructuring Plan”), partially offset by the reinvestment of these savings in the Company’s business including $6 million of incremental investment in technology in the quarter.

Net income was $96 million compared to $37 million in the prior-year quarter. The increase in net income was primarily due to the factors described above, and the impact of exchange rates on the Company’s Euro-denominated debt resulting in a gain of $21 million in the quarter compared to a loss of $20 million in the prior-year quarter, partially offset by an increase in interest expense, net, primarily due to increased costs on the Company’s variable rate debt.

Basic and Diluted earnings per share were $0.18 for both the Class A and Class B shareholders due to the net income attributable to the Company in the quarter of $96 million.

As of March 31, 2024, the Company reported a cash balance of $587 million, total debt of $3.984 billion and net debt (defined as total debt, net of deferred financing costs, premiums and discounts, minus cash and equivalents) of $3.397 billion.

Cash used in operating activities increased to $31 million in the quarter compared to $6 million in the prior-year quarter. The increase was largely due to increased artist and repertoire investment and the timing of working capital, partially offset by strong operating performance. Capital expenditures decreased 26% to $26 million from $35 million in the prior-year quarter, driven by the timing of investment in technology. Free Cash Flow, as defined below, decreased to a use of $57 million from a use of $41 million in the prior-year quarter.

Recorded Music


Recorded Music Summary Results
(dollars in millions)
	For the Three Months Ended March 31, 2024		For the Three Months Ended March 31, 2023		% Change		For the Six Months Ended March 31, 2024		For the Six Months Ended March 31, 2023		% Change
	(unaudited)		(unaudited)				(unaudited)		(unaudited)
Revenue	$	1,189	$	1,143	4	%	$	2,634	$	2,382	11	%
Operating income	134		151		-11	%	508		434		17	%
Adjusted OIBDA(1)	272		249		9	%	684		548		25	%

(1) See "Supplemental Disclosures Regarding Non-GAAP Financial Measures" at the end of this release for details regarding this measure.


Recorded Music Revenue
(dollars in millions)

	For the Three Months Ended March 31, 2024		For the Three Months Ended March 31, 2023		For the Three Months Ended March 31, 2023		For the Six Months Ended March 31, 2024		For the Six Months Ended March 31, 2023		For the Six Months Ended March 31, 2023
	As reported		As reported		Constant		As reported		As reported		Constant
	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
Digital	$	848	$	796	$	792	$	1,756	$	1,599	$	1,600
Physical	111		118		119		265		251		255
Total Digital and Physical	959		914		911		2,021		1,850		1,855
Artist services and expanded-rights	126		131		130		330		337		342
Licensing	104		98		99		283		195		198
Total Recorded Music	$	1,189	$	1,143	$	1,140	$	2,634	$	2,382	$	2,395

Recorded Music revenue was up 4.0% (or 4.3% in constant currency) driven by growth in digital and licensing revenue, partially offset by lower physical and artist services and expanded-rights revenue. Excluding the impact from the BMG Termination and the Digital License Renewal, Recorded Music revenue increased 6.4% (or 6.7% in constant currency). Digital revenue was up 6.5% (or 7.1% in constant currency) and streaming revenue was up 7.1% (or 7.7% in constant currency). Adjusted for the impact of the BMG Termination of $20 million and the Digital License Renewal of $4 million, Recorded Music streaming revenue was up 10.5% (or 11.1% in constant currency). Streaming revenue reflects growth in subscription revenue of 8.3% (or 8.8% in constant currency) and growth in ad-supported revenue of 3.9% (or 4.4% in constant currency). Adjusted for the BMG Termination and the Digital License Renewal, subscription revenue increased 12.8% (or 13.5% in constant currency). Licensing revenue increased 6.1% (or 5.1% in constant currency), driven by an increase in copyright infringement settlements. Physical revenue decreased 5.9% (or 6.7% in constant currency), primarily driven by the timing of new releases. Artist services and expanded-rights revenue decreased 3.8% (or 3.1% in constant currency) primarily due to lower merchandising revenue, partially offset by higher concert promotion revenue in France and Japan. Major sellers included Zach Bryan, Ed Sheeran, Jack Harlow and Green Day.

Recorded Music operating income was $134 million, a decrease from $151 million in the prior-year quarter, and operating margin was down 1.9 percentage points to 11.3% versus 13.2% in the prior-year quarter. The decrease in operating income was primarily driven by severance costs of $42 million and $47 million of impairment losses on unamortized intangibles primarily due to the exit of certain non-core owned and operated media properties in connection with the Strategic Restructuring Plan announced in February 2024, compared to $41 million of restructuring charges in the prior-year quarter, partially offset by lower amortization expenses of $7 million due to certain intangible assets becoming fully amortized.

Adjusted OIBDA increased 9.2% to $272 million from $249 million (the same in constant currency) and Adjusted OIBDA margin increased 1.1 percentage points to 22.9% from 21.8% in the prior-year quarter (the same in constant currency). The increases in Adjusted OIBDA and Adjusted OIBDA margin were driven by strong operating performance and $12

million of savings from the 2023 Restructuring Plan of which a portion has been reinvested in the Company’s business, partially offset by the unfavorable impact of exchange rates.

Music Publishing


Music Publishing Summary Results
(dollars in millions)
	For the Three Months Ended March 31, 2024		For the Three Months Ended March 31, 2023		% Change		For the Six Months Ended March 31, 2024		For the Six Months Ended March 31, 2023		% Change
	(unaudited)		(unaudited)				(unaudited)		(unaudited)
Revenue	$	306	$	257	19	%	$	610	$	507	20	%
Operating income	69		52		33	%	132		101		31	%
Adjusted OIBDA(1)	82		76		8	%	168		148		14	%

(1) See "Supplemental Disclosures Regarding Non-GAAP Financial Measures" at the end of this release for details regarding this measure.


Music Publishing Revenue
(dollars in millions)

	For the Three Months Ended March 31, 2024		For the Three Months Ended March 31, 2023		For the Three Months Ended March 31, 2023		For the Six Months Ended March 31, 2024		For the Six Months Ended March 31, 2023		For the Six Months Ended March 31, 2023
	As reported		As reported		Constant		As reported		As reported		Constant
	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
Performance	$	52	$	45	$	44	$	103	$	90	$	90
Digital	187		146		147		383		295		298
Mechanical	15		16		16		30		30		31
Synchronization	48		46		47		87		85		86
Other	4		4		4		7		7		7
Total Music Publishing	$	306	$	257	$	258	$	610	$	507	$	512

Music Publishing revenue increased 19.1% (or 18.6% in constant currency). The increase was driven by growth in digital, performance and synchronization revenue. Digital revenue increased 28.1% (or 27.2% in constant currency) and streaming revenue increased 30.3% (or 29.4% in constant currency), reflecting the continued growth in streaming, the impact of digital deal renewals and continued investment in the Company’s publishing catalog. Performance revenue increased 15.6% (or 18.2% in constant currency) due to strong artist touring activity in Europe. Mechanical revenue decreased $1 million or 6% (the same in constant currency), primarily driven by lower physical sales. Synchronization revenue grew 4.3% (or 2.1% in constant currency), driven by the timing of copyright infringement settlements.

Music Publishing operating income increased to $69 million compared to $52 million in the prior-year quarter and operating margin increased 2.3 percentage points to 22.5%. The increase in operating income was primarily driven by the same factors affecting Adjusted OIBDA discussed below, as well as a $14 million net gain on a divestiture of certain music publishing rights in the quarter.

Music Publishing Adjusted OIBDA increased 7.9% to $82 million (the same in constant currency) and Adjusted OIBDA margin decreased 2.8 percentage points to 26.8% from 29.6% in the prior-year quarter (or decreased 2.7 percentage points to 26.8% from 29.5% in constant currency). The increase in Adjusted OIBDA was driven by higher revenue, while the decrease in Adjusted OIBDA margin compared to the prior-year quarter is primarily attributable to revenue mix.

Financial details for the quarter can be found in the Company’s current Quarterly Report on Form 10-Q for the period ended March 31, 2024, 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.

We maintain an Internet site at www.wmg.com. We use our website as a channel of distribution for material company information. Financial and other material information regarding Warner Music Group is routinely posted on and accessible at http://investors.wmg.com. In addition, you may automatically receive email alerts and other information about Warner Music Group by enrolling your email address through the “email alerts” section at http://investors.wmg.com. Our website and the information posted on it or connected to it shall not be deemed to be incorporated by reference into this communication.


Figure 1. Warner Music Group Corp. - Condensed Consolidated Statements of Operations, Three and Six Months Ended March 31, 2024 versus March 31, 2023
(dollars in millions)

	For the Three Months Ended March 31, 2024		For the Three Months Ended March 31, 2023		% Change
	(unaudited)		(unaudited)
Revenue	$	1,494	$	1,399	7	%
Cost and expenses:
Cost of revenue	(791)		(721)		10	%
Selling, general and administrative expenses	(446)		(452)		-1	%
Restructuring and impairments	(95)		(41)		—	%
Amortization expense	(57)		(61)		-7	%
Total costs and expenses	$	(1,389)	$	(1,275)	9	%
Net gain on divestiture	14		—		—	%
Operating income	$	119	$	124	-4	%
Loss on extinguishment of debt	—		—		—	%
Interest expense, net	(42)		(35)		20	%
Other income (expense), net	37		(31)		—	%
Income before income taxes	$	114	$	58	97	%
Income tax expense	(18)		(21)		-14	%
Net income	$	96	$	37	—	%
Less: Income attributable to noncontrolling interest	—		(3)		-100	%
Net income attributable to Warner Music Group Corp.	$	96	$	34	—	%

Net income per share attributable to common stockholders:
Class A – Basic and Diluted	$	0.18	$	0.06
Class B – Basic and Diluted	$	0.18	$	0.06

	For the Six Months Ended March 31, 2024		For the Six Months Ended March 31, 2023		% Change
	(unaudited)		(unaudited)
Revenue	3,242		2,887		12	%
Cost and expenses:
Cost of revenue	(1,671)		(1,482)		13	%
Selling, general and administrative expenses	(922)		(892)		3	%
Restructuring and impairments	(95)		(41)		—	%
Amortization expense	(112)		(124)		-10	%
Total costs and expenses	(2,800)		(2,539)		10	%
Net gain on divestiture	31		41		-24	%
Operating income	473		389		22	%
Loss on extinguishment of debt	—		—		—	%
Interest expense, net	(81)		(67)		21	%
Other expense, net	(13)		(92)		-86	%
Income before income taxes	379		230		65	%
Income tax expense	(90)		(69)		30	%
Net income	289		161		80	%
Less: Income attributable to noncontrolling interest	(34)		(5)		—	%
Net income attributable to Warner Music Group Corp.	255		156		63	%

Net income per share attributable to common stockholders:
Class A – Basic and Diluted	$	0.49	$	0.30


Class B – Basic and Diluted			$	0.49					$	0.30


Figure 2. Warner Music Group Corp. - Condensed Consolidated Balance Sheets at March 31, 2024 versus September 30, 2023
(dollars in millions)

	March 31, 2024		September 30, 2023		% Change
	(unaudited)
Assets
Current assets:
Cash and equivalents	$	587	$	641	-8	%
Accounts receivable, net	1,197		1,120		7	%
Inventories	97		126		-23	%
Royalty advances expected to be recouped within one year	456		413		10	%
Prepaid and other current assets	113		102		11	%
Total current assets	$	2,450	$	2,402	2	%
Royalty advances expected to be recouped after one year	759		688		10	%
Property, plant and equipment, net	462		458		1	%
Operating lease right-of-use assets, net	233		245		-5	%
Goodwill	2,007		1,993		1	%
Intangible assets subject to amortization, net	2,318		2,353		-1	%
Intangible assets not subject to amortization	150		149		1	%
Deferred tax assets, net	30		32		-6	%
Other assets	322		225		43	%
Total assets	$	8,731	$	8,545	2	%
Liabilities and Equity
Current liabilities:
Accounts payable	$	306	$	300	2	%
Accrued royalties	2,409		2,219		9	%
Accrued liabilities	465		533		-13	%
Accrued interest	18		18		—	%
Operating lease liabilities, current	43		41		5	%
Deferred revenue	234		371		-37	%
Other current liabilities	58		57		2	%
Total current liabilities	$	3,533	$	3,539	—	%
Long-term debt	3,984		3,964		1	%
Operating lease liabilities, noncurrent	239		255		-6	%
Deferred tax liabilities, net	236		216		9	%
Other noncurrent liabilities	154		141		9	%
Total liabilities	$	8,146	$	8,115	—	%
Equity:
Class A common stock	$	—	$	—	—	%
Class B common stock	1		1		—	%
Additional paid-in capital	2,043		2,015		1	%
Accumulated deficit	(1,310)		(1,387)		-6	%
Accumulated other comprehensive loss, net	(301)		(322)		-7	%
Total Warner Music Group Corp. equity	$	433	$	307	41	%
Noncontrolling interest	152		123		24	%
Total equity	585		430		36	%
Total liabilities and equity	$	8,731	$	8,545	2	%


Figure 3. Warner Music Group Corp. - Summarized Statements of Cash Flows, Three and Six Months Ended March 31, 2024 versus March 31, 2023
(dollars in millions)

	For the Three Months Ended March 31, 2024		For the Three Months Ended March 31, 2023
	(unaudited)		(unaudited)
Net cash used in operating activities	$	(31)	$	(6)
Net cash used in investing activities	(33)		(41)
Net cash used in financing activities	(97)		(73)
Effect of foreign currency exchange rates on cash and equivalents	(6)		1
Net decrease in cash and equivalents	$	(167)	$	(119)

	For the Six Months Ended March 31, 2024		For the Six Months Ended March 31, 2023
	(unaudited)		(unaudited)
Net cash provided by operating activities	$	262	$	203
Net cash used in investing activities	(125)		(51)
Net cash used in financing activities	(190)		(143)
Effect of foreign currency exchange rates on cash and equivalents	(1)		8
Net (decrease) increase in cash and equivalents	$	(54)	$	17


Figure 4. Warner Music Group Corp. - Digital Revenue Summary, Three and Six Months Ended March 31, 2024 versus March 31, 2023
(dollars in millions)

	For the Three Months Ended March 31, 2024		For the Three Months Ended March 31, 2023		% Change
	(unaudited)		(unaudited)
Recorded Music
Subscription	$	615	$	568	8	%
Ad-Supported	213		205		4	%
Streaming	$	828	$	773	7	%
Downloads and Other Digital	20		23		-13	%
Total Recorded Music Digital Revenue	$	848	$	796	7	%

Music Publishing
Streaming	$	185	$	142	30	%
Downloads and Other Digital	2		4		-50	%
Total Music Publishing Digital Revenue	$	187	$	146	28	%

Consolidated
Streaming	$	1,013	$	915	11	%
Downloads and Other Digital	22		27		-19	%
Intersegment Eliminations	—		—		—	%
Total Digital Revenue	$	1,035	$	942	10	%

	For the Six Months Ended March 31, 2024		For the Six Months Ended March 31, 2023		% Change
	(unaudited)		(unaudited)
Recorded Music
Subscription	$	1,259	$	1,127	12	%
Ad-Supported	456		426		7	%
Streaming	$	1,715	$	1,553	10	%
Downloads and Other Digital	41		46		-11	%
Total Recorded Music Digital Revenue	$	1,756	$	1,599	10	%

Music Publishing
Streaming	$	378	$	288	31	%
Downloads and Other Digital	5		7		-29	%
Total Music Publishing Digital Revenue	$	383	$	295	30	%

Consolidated
Streaming	$	2,093	$	1,841	14	%
Downloads and Other Digital	46		53		-13	%
Intersegment Eliminations	—		—		—	%
Total Digital Revenue	$	2,139	$	1,894	13	%

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.


Figure 5. Warner Music Group Corp. - Reconciliation of Net Income to Adjusted OIBDA, Three and Six Months Ended March 31, 2024 versus March 31, 2023
(dollars in millions)

	For the Three Months Ended March 31, 2024			For the Three Months Ended March 31, 2023			% Change
	(unaudited)			(unaudited)
Net income attributable to Warner Music Group Corp.	$	96		$	34		—	%
Income attributable to noncontrolling interest	—			3			-100	%
Net income	$	96		$	37		—	%
Income tax expense	18			21			-14	%
Income including income taxes	$	114		$	58		97	%
Other (income) expense, net	(37)			31			—	%
Interest expense, net	42			35			20	%
Loss on extinguishment of debt	—			—			—	%
Operating income	$	119		$	124		-4	%
Amortization expense	57			61			-7	%
Depreciation expense	26			22			18	%
OIBDA	$	202		$	207		-2	%
Restructuring and impairments	95			41			—	%
Transformation initiatives and other related costs	19			14			36	%
Net gain on divestitures	(14)			—			—	%
Executive transition costs	—			3			-100	%
Non-cash stock-based compensation and other related costs	10			21			-52	%
Adjusted OIBDA	$	312		$	286		9	%

Operating income margin	8.0		%	8.9		%
Adjusted OIBDA margin	20.9		%	20.4		%

	For the Six Months Ended March 31, 2024			For the Six Months Ended March 31, 2023			% Change
	(unaudited)			(unaudited)
Net income attributable to Warner Music Group Corp.	$	255		$	156		63	%
Income attributable to noncontrolling interest	34			5			—	%
Net income	$	289		$	161		80	%
Income tax expense	90			69			30	%
Income including income taxes	$	379		$	230		65	%
Other expense, net	13			92			-86	%
Interest expense, net	81			67			21	%
Loss on extinguishment of debt	—			—			—	%
Operating income	$	473		$	389		22	%
Amortization expense	112			124			-10	%
Depreciation expense	52			43			21	%
OIBDA	$	637		$	556		15	%
Restructuring and impairments	95			41			—	%
Transformation initiatives and other related costs	38			26			46	%
Executive transition costs	—			3			-100	%
Net gain on divestitures	(31)			(41)			-24	%
Non-cash stock-based compensation and other related costs	24			36			-33	%
Adjusted OIBDA	$	763		$	621		23	%

Operating income margin	14.6		%	13.5		%
Adjusted OIBDA margin	23.5		%	21.5		%


Figure 6. Warner Music Group Corp. - Reconciliation of Segment Operating Income to Adjusted OIBDA, Three and Six Months Ended March 31, 2024 versus March 31, 2023
(dollars in millions)

	For the Three Months Ended March 31, 2024			For the Three Months Ended March 31, 2023			% Change
	(unaudited)			(unaudited)
Total WMG operating income – GAAP	$	119		$	124		-4	%
Depreciation and amortization expense	(83)			(83)			—	%
Total WMG OIBDA	$	202		$	207		-2	%
Restructuring and impairments	95			41			—	%
Transformation initiatives and other related costs	19			14			36	%
Net gain on divestitures	(14)			—			—	%
Executive transition costs	—			3			-100	%
Non-cash stock-based compensation and other related costs	10			21			-52	%
Total WMG Adjusted OIBDA	$	312		$	286		9	%
Total WMG Adjusted OIBDA margin	20.9		%	20.4		%

Recorded Music operating income – GAAP	$	134		$	151		-11	%
Depreciation and amortization expense	(45)			(52)			-13	%
Recorded Music OIBDA	$	179		$	203		-12	%
Restructuring and impairments	$	88		$	41		—	%

Net gain on divestitures	$	—		$	—		—	%
Non-cash stock-based compensation and other related costs	$	5		$	5		—	%
Recorded Music Adjusted OIBDA	$	272		$	249		9	%
Recorded Music Adjusted OIBDA margin	22.9		%	21.8		%

Music Publishing operating income – GAAP	$	69		$	52		33	%
Depreciation and amortization expense	(26)			(23)			13	%
Music Publishing OIBDA	$	95		$	75		27	%


Net gain on divestitures	$	(14)		$	—		—	%
Non-cash stock-based compensation and other related costs	$	1		$	1		—	%
Music Publishing Adjusted OIBDA	$	82		$	76		8	%
Music Publishing Adjusted OIBDA margin	26.8		%	29.6		%


	For the Six Months Ended March 31, 2024			For the Six Months Ended March 31, 2023			% Change
	(unaudited)			(unaudited)
Total WMG operating income – GAAP	$	473		$	389		22	%
Depreciation and amortization expense	(164)			(167)			-2	%

Total WMG OIBDA	$	637		$	556		15	%
Restructuring and impairments	95			41			—	%
Transformation initiatives and other related costs	38			26			46	%
Executive transition costs	—			3			-100	%
Net gain on divestitures	(31)			(41)			-24	%
Non-cash stock-based compensation and other related costs	24			36			-33	%
Total WMG Adjusted OIBDA	$	763		$	621		23	%
Total WMG Adjusted OIBDA margin	23.5		%	21.5		%

Recorded Music operating income – GAAP	$	508		$	434		17	%
Depreciation and amortization expense	(92)			(106)			-13	%


Recorded Music OIBDA	$	600		$	540		11	%
Restructuring and impairment	88			41			—	%
Transformation initiative and other related costs	—			—			—	%
Executive transition costs	—			—			—	%
Net gain on divestitures	(17)			(41)			-59	%
Non-cash stock-based compensation and other related costs	13			8			63	%
Recorded Music Adjusted OIBDA	$	684		$	548		25	%
Recorded Music Adjusted OIBDA margin	26.0		%	23.0		%

Music Publishing operating income – GAAP	$	132		$	101		31	%
Depreciation and amortization expense	(48)			(46)			4	%
Music Publishing OIBDA	$	180		$	147		22	%



Net gain on divestitures	(14)			—			—	%
Non-cash stock-based compensation and other related costs	2			1			100	%
Music Publishing Adjusted OIBDA	$	168		$	148		14	%
Music Publishing Adjusted OIBDA margin	27.5		%	29.2		%

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.


Figure 7. Warner Music Group Corp. - Revenue by Geography and Segment, Three and Six Months Ended March 31, 2024 versus March 31, 2023 As Reported and Constant Currency
(dollars in millions)

	For the Three Months Ended March 31, 2024		For the Three Months Ended March 31, 2023		For the Three Months Ended March 31, 2023		% Change
	As reported		As reported		Constant		Constant
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
U.S. revenue
Recorded Music	$	508	$	522	$	522	(3)	%
Music Publishing	170		135		135		26	%
International revenue
Recorded Music	681		621		618		10	%
Music Publishing	136		122		123		11	%
Intersegment eliminations	(1)		(1)		(1)		—	%
Total Revenue	$	1,494	$	1,399	$	1,397	7	%

Revenue by Segment:
Recorded Music
Digital	$	848	$	796	$	792	7	%
Physical	111		118		119		(7)	%
Total Digital and Physical	959		914		911		5	%
Artist services and expanded-rights	126		131		130		(3)	%
Licensing	104		98		99		5	%
Total Recorded Music	1,189		1,143		1,140		4	%
Music Publishing
Performance	52		45		44		18	%
Digital	187		146		147		27	%
Mechanical	15		16		16		(6)	%
Synchronization	48		46		47		2	%
Other	4		4		4		—	%
Total Music Publishing	306		257		258		19	%
Intersegment eliminations	(1)		(1)		(1)		—	%
Total Revenue	$	1,494	$	1,399	$	1,397	7	%

Total Digital Revenue	$	1,035	$	942	$	939	10	%

	For the Six Months Ended March 31, 2024		For the Six Months Ended March 31, 2023		For the Six Months Ended March 31, 2023		% Change
	As reported		As reported		Constant		Constant
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
U.S. revenue
Recorded Music	$	1,135	$	1,061	$	1,061	7	%


Music Publishing	342		268		268		28	%
International revenue
Recorded Music	1,499		1,321		1,334		12	%
Music Publishing	268		239		244		10	%
Intersegment eliminations	(2)		(2)		(2)		—	%
Total Revenue	$	3,242	$	2,887	$	2,905	12	%

Revenue by Segment:
Recorded Music
Digital	$	1,756	$	1,599	$	1,600	10	%
Physical	265		251		255		4	%
Total Digital and Physical	$	2,021	$	1,850	$	1,855	9	%
Artist services and expanded-rights	330		337		342		(4)	%
Licensing	283		195		198		43	%
Total Recorded Music	$	2,634	$	2,382	$	2,395	10	%
Music Publishing
Performance	$	103	$	90	$	90	14	%
Digital	383		295		298		29	%
Mechanical	30		30		31		(3)	%
Synchronization	87		85		86		1	%
Other	7		7		7		—	%
Total Music Publishing	$	610	$	507	$	512	19	%
Intersegment eliminations	(2)		(2)		(2)		—	%
Total Revenue	$	3,242	$	2,887	$	2,905	12	%

Total Digital Revenue	$	2,139	$	1,894	$	1,898	13	%


Figure 8. Warner Music Group Corp. - Adjusted OIBDA by Segment, Three and Six Months Ended March 31, 2024 versus March 31, 2023 As Reported and Constant Currency
(dollars in millions)

	For the Three Months Ended March 31, 2024			For the Three Months Ended March 31, 2023			For the Three Months Ended March 31, 2023			Change %
	As reported			As reported			Constant			Constant
	(unaudited)			(unaudited)			(unaudited)			(unaudited)

Total WMG Adjusted OIBDA	$	312		$	286		$	286		9.1	%
Adjusted OIBDA margin	20.9		%	20.4		%	20.5		%


Recorded Music Adjusted OIBDA	$	272		$	249		$	249		9.2	%
Recorded Music Adjusted OIBDA margin	22.9		%	21.8		%	21.8		%


Music Publishing Adjusted OIBDA	$	82		$	76		$	76		7.9	%
Music Publishing Adjusted OIBDA margin	26.8		%	29.6		%	29.5		%

	For the Six Months Ended March 31, 2024			For the Six Months Ended March 31, 2023			For the Six Months Ended March 31, 2023			Change %
	As reported			As reported			Constant			Constant
	(unaudited)			(unaudited)			(unaudited)			(unaudited)


Total WMG Adjusted OIBDA	$	763		$	621		$	625		22.1	%
Adjusted OIBDA margin	23.5		%	21.5		%	21.5		%



Recorded Music Adjusted OIBDA	$	684		$	548		$	551		24.1	%
Recorded Music Adjusted OIBDA margin	26.0		%	23.0		%	23.0		%



Music Publishing Adjusted OIBDA	$	168		$	148		$	149		12.8	%
Music Publishing Adjusted OIBDA margin	27.5		%	29.2		%	29.1		%

Free Cash Flow

Our definition of Free Cash Flow is defined as cash flow provided by operating activities less capital expenditures. We use Free Cash Flow, among other measures, to evaluate our operating performance. Management believes Free Cash Flow provides investors with an important perspective on the cash available to fund our debt service requirements, ongoing working capital requirements, capital expenditure requirements, strategic acquisitions and investments, and any dividends, prepayments of debt or repurchases or retirement of our outstanding debt or notes in open market purchases, privately negotiated purchases, any repurchases of our common stock or otherwise. As a result, Free Cash Flow is a significant measure of our ability to generate long-term value. It is useful for investors to know whether this ability is being enhanced or degraded as a result of our operating performance. We believe the presentation of Free Cash Flow is relevant and useful for investors because it allows investors to view performance in a manner similar to the method management uses.

Free Cash Flow is not a measure of performance calculated in accordance with U.S. GAAP and therefore it should not be considered in isolation of, or as a substitute for, net income (loss) as an indicator of operating performance or cash flow provided by operating activities as a measure of liquidity. Free Cash Flow, as we calculate it, may not be comparable to similarly titled measures employed by other companies. In addition, Free Cash Flow does not necessarily represent funds available for discretionary use and is not necessarily a measure of our ability to fund our cash needs. Because Free Cash Flow deducts capital expenditures from “net cash provided by operating activities” (the most directly comparable U.S. GAAP financial measure), users of this information should consider the types of events and transactions that are not reflected. We provide below a reconciliation of Free Cash Flow to the most directly comparable amount reported under U.S. GAAP, which is “net cash provided by operating activities.”


Figure 9. Warner Music Group Corp. - Calculation of Free Cash Flow, Three and Six Months Ended March 31, 2024 versus March 31, 2023
(dollars in millions)

	For the Three Months Ended March 31, 2024		For the Three Months Ended March 31, 2023
	(unaudited)		(unaudited)
Net cash used in operating activities	$	(31)	$	(6)
Less: Capital expenditures	26		35

Free Cash Flow	$	(57)	$	(41)

	For the Six Months Ended March 31, 2024		For the Six Months Ended March 31, 2023
	(unaudited)		(unaudited)
Net cash provided by operating activities	$	262	$	203
Less: Capital expenditures	55		56

Free Cash Flow	$	207	$	147

______________________________________

###


Media Contact:			Investor Contact:
James Steven			Kareem Chin
(212) 275-2213
James.Steven@wmg.com			Investor.Relations@wmg.com

Cover	May 09, 2024
Cover [Abstract]
Document Type	8-K
Document Period End Date	May 09, 2024
Entity Registrant Name	Warner Music Group Corp.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-32502
Entity Tax Identification Number	13-4271875
Entity Address, Address Line One	1633 Broadway
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10019
City Area Code	(212)
Local Phone Number	275-2000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Class A Common Stock, $0.001 par value per share
Trading Symbol	WMG
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Amendment Flag	false
Entity Central Index Key	0001319161