Warner Music Group reported quarterly revenue edged nearly 1% lower and net income was down almost 63% for the start of the year, as the label home of stars like Bruno Mars and Lady Gaga struggled with tough comparisons to last year’s quarter.
WMG reported overall revenue of $1.48 billion and recorded music revenue of $1.175 billion, a 1% decline, for the fiscal second quarter, which ended March 31, compared to a year ago. Publishing revenue rose 1% to $310 million. Net income was $36 million compared to $96 million a year ago, due to lower recorded music revenue, a $34-million loss due to exchange rates costing the company more on its euro-denominated loans and an $11 million increase in a certain kind of taxes.
Total digital revenue slipped 1% with streaming revenue roughly flat, which reflects the comparison to last year’s boon quarter, a lighter release slate and market share loss in China.
WMG CEO Robert Kyncl says these results belie the green shoots showing from company’s cost-cutting and new releases strategy, which he says results in their growing market share of new releases. Songs performed by WMG artists like Mars, Benson Boone and Teddy Swims currently claim half of the spots atop Billboard’s Global 200 chart.
“Our strategy is starting to bear fruit, with our strongest chart presence in two years … As a result, our true strength this quarter was partially obscured by challenging comparisons with last year’s outperformance,” Kyncl said in a statement, referring in part to last year’s 13.5% subscription streaming growth. “As we replicate our strategy across other labels and geographies, and drive a virtuous cycle of greater reinvestment, we expect to deliver lasting value for artists and songwriters, and sustained growth and profitability for shareholders.”
Adjusted operating income before depreciation and amortization (OIBDA) declined 3% to $303 million, and adjusted OIBDA margin decreased half a percentage point to 20.4%.
Because it earns more than half of its income from outside of the United States, WMG releases earnings on constant currency basis — a method that updates last year’s revenue and other line items using this year’s foreign exchange rates.
On a constant currency basis, overall quarterly revenue rose 1% — though recorded music and publishing both still declined by 2% and 5% respectively — and adjusted OIBDA declined by 1%.
Key WMG Financial Highlights for its Q2:
- Total revenue dipped 1% to $1.484 billion
- Net income was down 63% at $36 million
- Recorded music revenue slipped 1.2% to $1.175 billion
- Digital revenue (recorded music) was down 0.8% to $841 million
- Streaming revenue (recorded music) was down 0.4% to $825 million
- Physical revenue increased nearly 1% to $112 million
- Publishing revenue increased 1.3% to $310 million
- Digital revenue (publishing) increased 0.5% to $188
- Operating income was up 51% to $203 million
- OIBDA was down 1% to $270 million