Warner Music Group (WMG) investor relations material

Executive summary

• Revenue grew 10% year-over-year to $1.84 billion, with strong, profitable growth in both Recorded Music and Music Publishing, and adjusted OIBDA up 28%.

• Operating income rose 35% to $288 million, while net income declined 27% to $175 million due to currency impacts.

• Achieved high single-digit to double-digit revenue and adjusted OIBDA growth for three consecutive quarters, with robust operating cash flow.

• Strategic focus on AI partnerships, catalog acquisitions, and cost savings to drive future margin improvement and global expansion.

• Market share improved in U.S. streaming, with international chart success and major artist milestones.

Financial highlights

• Total revenue: $1.84 billion, up 10% year-over-year (7% in constant currency); streaming revenue up 9%.

• Adjusted OIBDA increased 28% to $463 million, margin up to 25.2%; operating cash flow grew 33% to $440 million.

• Free cash flow increased 42% to $420 million; cash balance rose to $751 million.

• Music Publishing revenue grew 12% to $362 million, with double-digit growth in performance, mechanical, sync, and streaming.

• Physical revenue declined 11% due to tough prior-year comparisons.

Outlook and guidance

• Confident in accelerating growth for 2026 and beyond, targeting 150–200 basis points of margin improvement and supported by strong release slate, DSP increases, and catalog acquisitions.

• AI partnerships expected to materially contribute to growth starting in fiscal 2027.

• Margin target in the mid- to high-20s% seen as realistic, with ongoing cost savings and efficiency initiatives.

• Operating cash flow conversion target remains at 50%-60%, with recent performance exceeding this.