WMG total revenue up 12.1% in Q4, digital revenue grows 23.1%

WMG total revenue up 12.1% in Q4, digital revenue grows 23.1%

Warner Music Group has revealed that total revenues were up 12.1% for Q4 and 9.4% for the full year ended September 30 – its biggest revenue increase in eight years.

In an earnings call this afternoon, the company also revealed significant digital growth across both Q4 and the full year. Digital revenue grew 21.0%, or was up 24.3% in constant currency for the full year, while for Q4 it grew 12.1% or was up 13.2% in constant currency. Overall, digital revenue grew 23.1% (or 24.6% in constant currency) and represented 48.8% of total revenue, compared to 44.4% in the prior-year quarter, highlighting the overall impact of streaming on its revenues.

Operating income was $55 million compared to $37 million in Q4 2015, while the net loss was $3 million compared to a net loss of $23 million in Q4 2015. Adjusted net loss was $2 million compared to an adjusted net loss of $15 million in the prior-year quarter.

For the full year, total revenue increased 9.4% (or 13.1% in constant currency).  Growth in Recorded Music digital revenue and artist services and expanded-rights revenue as well as growth in music publishing digital revenue, performance revenue and synchronisation revenue was partially offset by modest declines in recorded music physical revenue and licensing revenue and in music publishing mechanical revenue.  

Operating income was $214 million up from $127 million in the prior year.  Operating margin grew 6.6% from 4.3% in the prior year.  Adjusted operating margin rose 1.1 % to 6.4% from 5.3% in the prior year.

Net income was $30 million compared to a loss of $88 million in the previous year. Adjusted net income was $24 million compared to a loss of $59 million in the prior year.

“We’ve had another excellent year, in which we posted strong financial results and outperformed the industry,” said Steve Cooper, Warner Music Group’s CEO. “This fiscal year marked our highest total revenue in eight years and our highest OIBDA in a decade. We’re creating great momentum by investing in a flow of fantastic new music, expanding our presence around the globe and embracing new business models early. Given our extraordinary roster of recording artists and songwriters and the strength of our operators around the world, we’re excited by the possibilities in 2017 and beyond.

"For the first half of calendar 2016, our 2.5 percentage point jump in US recorded music market share was the greatest of any major," he added. "During the same time period, the US recorded music industry grew about 6% at wholesale, while our U.S. Recorded Music business grew at more than double that rate. We expect our revenue over-performance to be further highlighted by market share gains when full-year figures are available both for the US and on a global basis.

"Now that streaming is firmly established as our largest revenue source, we’re focused on finding ways to turbocharge mainstream adoption and improve monetization.  First, we’re enhancing our playlisting activity by growing our in-house expertise as well as through acquisitions, such as X5.  Second, we’re enabling greater consumer choice, by supporting tiered subscription offers from iHeartMusic, Pandora and Amazon.  Third, we are a very active part of the music community’s movement to close the value gap for user-uploaded services.

“Our formula for financial success is working,” added Eric Levin, Warner Music Group’s executive vice president and CFO. “This year we generated strong cash flow which enabled us to further optimise our capital structure by paying down and refinancing our debt and we plan to continue along this path.”


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