Warner Music Group Corp. has announced its third-quarter financial results for the period ended June 30, 2022.
Revenue was up 6.9% and driven by continued recovery of recorded music artist services and expanded-rights revenue, as well as continued growth in music publishing performance revenue.
Digital revenue increased 1.7% while total streaming revenue increased 2.7%, primarily driven by growth in music publishing streaming revenue of 29.6%. This includes a benefit of $17 million resulting from the recent ruling by the Copyright Royalty Board in Phonorecords III that upheld higher percentage of revenue U.S. mechanical royalty rates for 2018 to 2022, and reflects amounts expected to be paid.
Recorded music operating income was $166 million, down from $197 million in the prior-year quarter. Music publishing revenue increased 29.6%, which was driven by growth in digital, performance and synchronization revenue, partially offset by a decline in mechanical revenue. Digital revenue increased 27.4% and streaming revenue increased 29.6%, reflecting the continued growth in streaming, the CRB Rate Benefit and timing of new digital deals.
“We delivered solid double-digit growth on a constant-currency basis, even against the backdrop of a slowdown in the advertising market and some one-time items affecting year-over-year comparisons,” notes Steve Cooper, CEO, Warner Music Group. “In June, we saw the beginning of a new wave of amazing releases and we’re looking forward to a strong end to our fiscal year. Long term, we have the scale to best capitalize on trends in artist development, and the agility and resources to continue to propel the globalization and diversification of our business.”
“Our third-quarter results reflect the inherent resilience of our business that comes from our diverse portfolio of revenue streams,” adds Eric Levin, CFO, Warner Music Group. “With significant runway ahead in our core streaming business and new growth vectors constantly emerging, we are incredibly bullish on our growth potential for many years to come.”
Financial Highlights:
– Solid Underlying Streaming Growth Despite Ad-Supported Pressure
– Impressive Recovery of Artist Services with Continued Double-Digit Revenue Growth
– Continued Momentum in Music Publishing with Double-Digit Revenue Growth
– Significant Growth in Operating and Free Cash Flow
For the three months ended June 30, 2022:
– Total revenue grew 7% or 12% in constant currency
– Digital revenue grew 2% or 6% in constant currency
– Net income was $125 million versus $61 million in the prior-year quarter
– OIBDA (Operating Income Before Depreciation & Amortization) decreased 3% to $233 million versus $241 million in the prior-year quarter or increased 3% in constant currency
– Adjusted OIBDA decreased 3% to $255 million versus $263 million in the prior-year quarter or increased 2% in constant currency
– Adjusted EBITDA decreased 7% to $263 million versus $282 million in the prior-year quarter
– Cash provided by operating activities increased 79% to $163 million versus $91 million in the prior-year quarter
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