Warner Music Q2 results show ‘strong trends’ amid pandemic

Warner Music Group plans to move further into livestreaming after sharing its Q2 financials.

In the period to June 30, the third-largest major record company found that streaming revenue of US$589 million rose 9.1% to June 30.

Streaming now accounts for 93.5% of digital revenue and 68.4% of total recorded music sales.

Streaming revenue was “largely unaffected by COVID,” said Cooper while CFO Eric Levin used phrases including “consistently double-digit”, “quite stable” and “strong trends” to describe streaming’s resilient performance in the period.

This was in contrast to the other divisions, which were hammered into negative territory by the COVID-19 pandemic from early April. Revenue for Warner Music Group fell 5.7% to $1.010 billion from Q1 and 4.5% from Q2 2019.

Levin called the quarter’s results “slightly better than our expectations, given the sustained effect that COVID has had on certain aspects of our business.

“That’s a testament to the incredible ability of our teams, our artists and our songwriters to pivot and adapt, and to keep the hits coming.”

Recorded music generated $861 million in Q3, a 5.7% decline from the previous $913 million.

Physical sales were down 46% YOY to $51 million. Revenue from merchandise and touring were “dramatically affected,” according to Levin, dropping $34 million YoY to $124 million.

In publishing, the virus “clearly had a material impact”.

Warner’s publishing revenue grew 2.8% to $149 million in Q3 and climbed 5.6% to $488 million in the previous three quarters. Digital revenue of $90 million was 60.4% of total publishing revenue, up from 44.8% a year ago. 

The other three publishing categories – performance, mechanical and synchronization – collectively tumbled 26.3% to $59 million.

Major sellers in the period included Dua Lipa, Tones And I, Roddy Ricch, Lil Uzi Vert and Ed Sheeran. “Our strength in multiple genres has been a real strength during COVID,” Cooper said.

“Our commitment to new artist development is illustrated by the fact that four out of our top five best-sellers this quarter were from artists releasing debut or sophomore albums.

“Our artists and songwriters continue to create music that moves the world including, in the US, the most-streamed song of 2020 and the #1 and #2 biggest pop songs.”

Cooper also called the company’s IPO in May a “resounding success”.

CEO Stephen Cooper said the global pandemic has “hastened our move into the virtual concert world” in an earnings call after results were unveiled August 4.

“I would expect in the future that our activity in those areas is going to expand.”