Major Labels

WMG reports strong Q3 beating analyst expectations

Warner Music Group Corp. (WMG) announced strong quarterly earnings Tuesday that surpassed analysts’ expectations.

WMG earnings grew 33%, beating analysts’ predictions by 14.29%. Over the last four quarters, the company has surpassed consensus estimates three times.

Physical revenue grew 154.9% (or 136.4% in constant currency) due to increasing demand for vinyl and returning retail sales as businesses began to recover from COVID disruption.

Despite multiple strong quarters, WMG stock has lost about 2.6% since the beginning of the year versus the S&P 500’s gain of 16.8%.

Some investor skepticism stems from WMG’s ongoing investments to build a companion digital media group that includes Uproxx and Songkick. In addition to revenue diversity, the acquisitions are designed to give the company direct insights into consumer behavior.

WMG will continue to invest in this side of the business, CEO Steve Cooper said on Tuesday’s earning’s call.

Financial Highlights

  • Total Revenue Grew 27% Propelled by Streaming Acceleration and Partial Recovery in Certain COVID-Impacted Areas
  • Recorded Music Streaming Revenue Grew 27% Powered by Chart-Topping New Music
  • Robust Growth in Revenue from Emerging Streaming Platforms
  • Margin Expansion and High Operating Cash Flow Conversion Driven by Strong Operating Leverage

For the three months ended June 30, 2021

  • Total revenue grew 33% or 27% in constant currency
  • Digital revenue grew 29% or 23% in constant currency
  • Net income was $61 million versus net loss of $519 million in the prior-year quarter
  • OIBDA was income of $241 million versus a loss of $371 million in the prior-year quarter
  • Adjusted OIBDA increased 58% to $263 million versus $166 million in the prior-year quarter
  • Adjusted EBITDA increased 49% to $282 million versus $189 million in the prior-year quarter

Bruce Houghton is Founder and Editor of Hypebot and MusicThinkTank and serves as a Senior Advisor to Bandsintown which acquired both publications in 2019. He is the Founder and President of the Skyline Artists Agency and a professor for the Berklee College Of Music.

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