Warner Music Group Reports Upbeat Q3 Results; Total Revs Up 13.1%

Recorded Music Profits Up

WARNER MUSIC GROUP CORP. has announced its third quarter financial results for it's Q3 period which ended JUNE 30, 2017, and the results were very positive.  Here are the highlights:

•Total revenue grew 13.1% or was up 15.5% in constant currency 
•Digital revenue grew 30.2% or was up 33.0% in constant currency 
•Net income was $143 million versus a loss of $7 million in the prior-year quarter
•OIBDA declined 4.2% -- was $115 million versus $120 million in the prior-year quarter

WMG CEO STEVE COOPER said, "Our momentum continues with our eighth consecutive quarter of revenue growth – the last seven of which were up double digits.  "Our artists and songwriters are creating great music and our team is outperforming in a growing industry." 

And, WMG EVP & CFO ERIC LEVIN added, "I'm proud of our team for delivering such strong results, particularly against difficult comparisons in the prior-year quarter. I'm confident that 2017 will be another strong year."

Revenue grew 13.1% (or 15.5% in constant currency).  Growth in Recorded Music digital, licensing and artist services and expanded-rights revenue and in Music Publishing performance and digital revenue was partially offset by declines in Recorded Music physical revenue and Music Publishing mechanical revenue.  Music Publishing synchronization revenue was flat.  Revenue grew in all major regions.  Digital revenue grew 30.2% (or 33.0% in constant currency), and represented 54.1% of total revenue, compared to 47.0% in the prior-year quarter.  This is the second consecutive quarter where digital revenue exceeded 50% of the company’s total revenue.

Recorded Music revenue grew 13.2% (or 15.6% in constant currency).  Growth in digital, licensing and artist services and expanded-rights revenue was partially offset by a decline in physical revenue due to the continuing shift to streaming revenue. 

The improvement in licensing revenue was due to increased synchronization activity.  The increase in artist services and expanded-rights revenue was due primarily to higher merchandising and ticketing revenue in the U.S.  Recorded Music revenue grew in all major regions.  Top sellers included ED SHEERAN, BRUNO MARS, GORILLAZ, CLEAN BANDIT and TWICE.

Recorded Music operating income was $77 million, up from $64 million in the prior-year quarter, and operating margin was up 0.6 percentage points to 10.0% versus 9.4% in the prior-year quarter driven by revenue growth.  Adjusted operating margin rose 2.5 percentage points to 10.6% from 8.1% in the prior-year quarter.  

Music Publishing revenue rose 11.9% (or 14.5% in constant currency).  Revenue grew in performance and digital.  Mechanical revenue declined due to the continuing shift to digital.  Synchronization revenue was flat.  

Music Publishing operating income was $6 million, flat with the prior-year quarter.  Operating margin declined 0.5 percentage points to 4.0% from 4.5% driven by revenue mix.  Music Publishing OIBDA was flat at $23 million. Music Publishing OIBDA margin declined by 1.9 percentage points to 15.3% from 17.2%, due to revenue mix.  

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