Warner Music Group has announced financial results for the period ended March 31, 2021.
Revenue in the major’s fiscal Q2 was up 16.7% (12.8% in constant currency) year-on-year. Revenue increases in the quarter were driven by digital revenue growth, physical sales and an increase in publishing synch revenue.
Areas most affected by Covid were artist services and expanded-rights revenue in recorded music, and performance revenue in music publishing. Those areas dragged down the overall revenue results, which would otherwise have increased by 19.9% (16.3% in constant currency). Digital revenue grew 23% (19.8% in constant currency), and represented 68.8% of total revenue, compared to 65.3% in the prior-year quarter.
Recorded Music revenue was up 16.8% (12.9% in constant currency). The revenue increase was primarily due to the continuing growth in streaming revenue, which grew 23.2% (20.3% in constant currency) over the prior-year quarter. The result reflects accelerated revenue growth in emerging streaming platforms such as Facebook, TikTok and Peloton.
Physical revenue also grew, increasing 25.5% (19.2% in constant currency) primarily due to an increasing demand for vinyl products, as well as sales of new releases by The Yellow Monkey in Japan, Neil Young and Fleetwood Mac.
Artist services and expanded-rights revenue increased by 2.6% but decreased 3.3% in constant currency, which reflects the impact of Covid on concert touring and live events. It was partially offset by an increase in D2C merch revenue. Licensing revenue was down mainly due to lower broadcast fees resulting from Covid, partially offset by higher sync activity.
We have a fantastic slate of new music coming from established superstars and emerging talent
Major sellers in the quarter included Dua Lipa, Michael Bublé, Ed Sheeran, Ava Max and The Yellow Monkey.
WMG operating income was $151 million compared to an operating loss of $49m in the prior-year quarter.
Recorded Music operating income was $184m, up from $36m in the prior-year quarter.
"Following a strong first quarter, I’m happy to report that our momentum continued in Q2, and our business is stronger than ever,” said Steve Cooper, CEO, Warner Music Group. “Despite the ongoing pandemic, we generated double-digit revenue growth in both recorded music and music publishing.
“Our success was driven by chart-topping new releases from our incredible artists and songwriters, as well as bold and imaginative execution from our world-class operators. We’re excited about the rest of year, as we have a fantastic slate of new music coming from established superstars and emerging talent.”
"In the second quarter, the continued strength of our core streaming business was bolstered by impressive growth in revenue from emerging streaming platforms, which drove healthy margins and free cash flow,” added Eric Levin, EVP and CFO, Warner Music Group. “We look forward to delivering long-term value as we continue to invest in culture-shifting talent, innovative technology, and dynamic new partnerships."