“Our second-quarter results were strong,” said Steve Cooper, Warner Music Group’s CEO. “Our sustained investment in our artists and songwriters, our artist services business and our world-class operators, are delivering great results.”
“Revenue and OIBDA were both up double-digits,” added Eric Levin, Warner Music Group’s Executive Vice President and CFO. “Our cash position remains strong, with $470 million on the balance sheet at quarter-end.”
- Total revenue grew 13.2% or was up 17.6% in constant currency
- Digital revenue grew 20.8% or was up 25.0% in constant currency
- Net income was $67 million versus a net loss of $1 million in the prior-year quarter
- OIBDA (Operating income before depreciation and amortization) was $191 million, up 25.7% from $152 million in the prior-year quarter
Recorded Music revenue grew $142 million or 18.0% (or 22.4% in constant currency). This included a $51 million increase related to the acquisition of EMP and an $8 million increase due to the adoption of ASC 606, partially offset by a $24 million decrease related to concert promotion divestitures.
Growth in digital and artist services and expanded-rights revenue was partially offset by a decline in physical and licensing revenue. Digital growth reflects a continuing shift to streaming. The increase in artist services and expanded-rights revenue was largely attributable to the acquisition of EMP and higher merchandising and concert promotion revenue in international markets.
The decline in physical revenue reflects industry trends and the impact of strong prior-year quarter physical revenue. The decline in licensing was due to higher broadcast fees in the prior-year quarter and the impact of changes in exchange rates, which were partially offset by a $7 million increase attributable to the adoption of ASC 606. Recorded Music revenue grew in all regions. Major sellers included TWICE, Meek Mill, The Greatest Showman soundtrack, Ed Sheeran and Cardi B.
Recorded Music operating income was $134 million, up 67.5% from $80 million in the prior-year quarter and operating margin was up 4.3 percentage points to 14.4% versus 10.1% in the prior-year quarter. OIBDA increased 41.7% to $180 million from $127 million in the prior-year quarter and OIBDA margin increased 3.2 percentage points to 19.3%. Adjusted OIBDA was $185 million versus $153 million in the prior-year quarter with Adjusted OIBDA margin up 0.5 percentage points to 19.8%. Operating income, OIBDA and Adjusted OIBDA included $8 million related to the adoption of ASC 606. The increase in operating income, OIBDA and Adjusted OIBDA was also driven by revenue growth and lower variable compensation expense.