Warner Music Group (WMG) reported on Thursday (May 7) that first-quarter revenue rose 17% compared to last year on double-digit percentage growth in recorded music and publishing revenues, with major releases from artists including Bruno Mars and sombr contributing to the uptick.
Total revenue came in at $1.7 billion, driven by $1.38 billion in recorded music revenue, up 17%, and $353 million in music publishing, up 14% compared to a year ago. Operating income of $264 million was up 57%, and adjusted operating income before depreciation and amortization rose 31% to $397 million.
“After years of doing hard, unsexy, foundational work, after making tough organizational decisions and redesigns and difficult decisions while growing the business, we have now hit our stride,” Warner CEO Robert Kyncl said on a call discussing the results. “It feels great to work hard for years and now have consistent delivery, and it feels great to have confidence about the future.”
Digital revenue rose 16.7% to nearly $1.2 billion across the recorded music and publishing divisions, with streaming revenue rising 17.1%. Recorded music streaming revenue increased 16.5% and music publishing streaming revenue increased 20.0% overall, driven by broad-based growth in recorded music artist services and expanded rights, and physical revenue; along with music publishing synch and mechanical revenue.
Foreign exchange rates had a significant impact on WMG’s earnings, but, while it was detrimental to Universal Music Group’s earnings, the strengthening U.S. dollar resulted in a $22 million gain in the quarter on WMG’s euro-denominated debt. WMG also reported a currency exchange gain on intercompany loans of $12 million in the quarter, versus a $27 million loss in the year-ago quarter. Both contributed to WMG’s profit rising to $181 million from $36 million in the year-ago quarter.
Adjusting WMG’s earnings on a constant currency basis, which strips out foreign currency fluctuations, total revenue rose by 12%, and adjusted OIBDA rose 24%.
In addition to Mars and sombr, first-quarter releases from Alex Warren and Ed Sheeran helped drive recorded music revenue growth up 17.4%, or 12.7% in constant currency. Digital revenue was up nearly 16%, artist services and expanded-rights revenue rose 28.6%, and physical revenue rose 22%.
Music publishing revenue rose nearly 14%, or 9.6% in constant currency, bolstered by a nearly 20% increase across digital and streaming revenue following new publishing deals and renewals. Performance revenue rose nearly 10%, and synchronization revenue edged up $1 million compared to the year-ago quarter.
WMG and Bain have spent $650 million from their joint venture, called Beethoven JV, “to acquire a number of heavyweight … iconic, high-margin catalogs,” WMG’s CFO, Armin Zerza, said on a call with investors.
Zerza said the WMG’s reorganization, first announced in 2023, is helping the company achieve profit margin expansion that is at “the high end” of its target, or around 200 basis points of margin expansion this year. Adjusted OIBDA margin expanded by 2.5 percentage points to 22.9% in the quarter.
“At the same time, we are leading the industry in AI initiatives, which we believe will be a material contributor to our top and bottom line growth, starting in fiscal 2027,” Zerza said.
Earnings highlights:
- Total revenue rose 17%, or 12% in constant currency, to $1.7 billion.
- Net income of $181 million rose from $36 million in Q1 2025, benefiting from the strength of the U.S. dollar.
- Operating income rose 57% to $264 million.
- Adjusted OIBDA rose 31% to $397 million, or 24% in constant currency.
- Recorded music revenue rose 17% to $1.38 billion.
- Music publishing revenue rose 14% to $353 million.
- Earnings per share was $0.35 compared to $0.07 in the prior-year quarter.
