Warner Music Group (WMG) turned in a roughly 7% year-over-year revenue increase during the first three months of 2024, when double-digit publishing growth helped offset a physical sales decline.
The major label posted its financials for Q1 2024 (the second quarter of the fiscal year) today, one week after Universal Music shed light on its own first-quarter performance. Digging into the newer of the breakdowns, WMG’s total Q1 revenue finished at $1.49 billion, with recorded music contributing the lion’s share of the sum at $1.19 billion.
The recorded figure represents a comparatively modest 4% YoY boost and includes $848 million from digital (up 6.5% YoY). As mentioned, though, recorded physical sales (from CDs, vinyl, and more) fell nearly 6% YoY to $111 million; WMG chalked up the dip to the timing of new releases.
Also affecting recorded music was a $22 million unfavorable impact from BMG’s split with ADA. Excluding that multimillion-dollar hit, recorded streaming revenue expanded 10.5% YoY in Q1, including 8.3% growth on the subscription side ($615 million total) following a number of price increases.
Artist services slipped 3.8% YoY to $126 million because of lower merch sales, WMG communicated, and licensing improved from $98 million to $104 million in Q1 2024 to round out the recorded category. During the corresponding earnings call, WMG CEO Robert Kyncl emphasized his company’s momentum (compared to that of the other majors) in emerging markets such as India.
“We’ve seen impressive results this past year,” said Kyncl. “In Argentina, the fastest-growing market in 2023, we doubled our year-over-year revenue organically. In Sub-Saharan Africa, the fastest-growing region in 2022 and 2023, we were the only major music company to grow share last year. In India, already the 14th-largest market and climbing fast, we were again the only major to grow share in 2023.”
Shifting to publishing, WMG reported $306 million in revenue for the category across January, February, and March, up 19.1% YoY. A 30.3% streaming spike ($185 million total), a $2 million sync uptick ($48 million total), and a $7 million performance surge ($52 million total) offset a small decrease in mechanical ($15 million total).
Lastly, in terms of WMG’s core Q1 2024 financials, operating income decreased 4% to $119 million, with net income rising from $34 million to $96 million.
Overall, Warner Music’s Q1 2024 earnings call was free of particularly groundbreaking developments, with the most interesting comments coming from Kyncl and concerning the company’s plans for catalog buyouts moving forward.
“On the content-rights piece,” added Kyncl, “there’s a lot of opportunities. The pipelines of deals that we’re maintaining are pretty significant. It is more than we can even afford today. Therefore, we’re very diligent about what we go after and the returns that we can yield from that.
“And it’s all around the world. There are lots of different opportunities, and we expect those to continue and perhaps even increase. Because there have been many buyers in the past who may need to make changes in their portfolios,” continued the former YouTube exec.
Elsewhere in the call, Kyncl opted against explaining the precise reasons for shelving the Believe purchase plans, indicating only that “we decided not to pursue it for a variety of reasons that I really can’t go into.”
Meanwhile, WMG has “been working on” its superfan app but has “nothing new to announce,” Kyncl also relayed, underscoring as well a need for the majors to “stay vigilant” when it comes to dealing with relatively new UGC-centered platforms like TikTok.
At the time of this writing, Warner Music shares (NASDAQ: WMG) were down 6% on the day at $33.50 apiece. That value is nevertheless over 30% higher than the stock’s per-share worth in mid-May of 2023.
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