Warner Music Group Reports 5% Revenue Decline, Net Income Increases by 48%

Warner Music Group Corp. reported a decline in financial performance for the three months ended December 31, 2024, with total revenues decreasing by 5% to $1.666 billion, down from $1.748 billion in the same period last year. The decrease was attributed to several factors, including the termination of a distribution agreement with BMG, which resulted in a $32 million reduction in Recorded Music revenue. Additionally, the prior-year quarter benefited from a $75 million licensing agreement extension and a $30 million digital license renewal, which did not recur in the current period. Despite these challenges, net income attributable to Warner Music Group increased by 48% to $236 million, compared to $159 million in the prior year, driven by lower interest expenses and other income gains.

In terms of operational metrics, the company experienced a 7% decline in Recorded Music revenues, totaling $1.345 billion, while Music Publishing revenues increased by 6% to $323 million. The U.S. market saw a significant drop in Recorded Music revenue, down 15% to $532 million, while international revenues remained relatively stable. Digital revenues, which accounted for a substantial portion of total revenue, decreased by 2% to $1.082 billion, reflecting a shift in consumer preferences and market dynamics. The company reported a total of 144.98 million shares of Class A Common Stock and 375.38 million shares of Class B Common Stock outstanding as of February 3, 2025.

Warner Music Group is undergoing a Strategic Restructuring Plan aimed at reallocating resources to enhance growth in its core operations. The plan is expected to incur approximately $230 million in non-recurring charges, including severance and impairment costs. For the three months ended December 31, 2024, the company recognized $27 million in restructuring and impairment charges, primarily related to the write-off of certain audiovisual production assets. The restructuring efforts are intended to streamline operations and improve efficiency, with a focus on investing in music and technology capabilities.

The company’s cash flow from operating activities improved to $332 million, up from $293 million in the prior year, reflecting better working capital management. However, cash used in investing activities decreased to $81 million, while cash used in financing activities increased to $127 million, primarily due to dividend payments totaling $94 million. As of December 31, 2024, Warner Music Group had $3.955 billion in long-term debt and $802 million in cash and equivalents, indicating a net debt of $3.153 billion.

Looking ahead, Warner Music Group remains focused on leveraging its extensive catalog and artist relationships to drive growth in both recorded music and music publishing. The company anticipates that ongoing investments in digital distribution and artist services will enhance its competitive position in the evolving music landscape. The management expressed optimism about future performance, contingent on successful execution of its strategic initiatives and market conditions.