Warner Music announces best quarter growth in 14 years
Warner Music Group has posted its biggest revenue growth in 14 years, with its third quarter (ending June 30) showing a 13.1% uptick to US$917 million in recorded music and publishing.
As to be expected, the growth was fuelled by streaming, which in Q3 was up 58.6% year-on-year to $360 million.
Digital revenue of US$496 million showed a gain of 30.2% over the same period in 2016.
This was the second consecutive quarter where digital accounted for over half of total revenue. It now represents 54%, growing from 53.2% in the last quarter.
“Our momentum continues with our eighth consecutive quarter of revenue growth – the last seven of which were up double digits,” said the company’s CEO Steve Cooper.
“Our artists and songwriters are creating great music and our team is outperforming in a growing industry.”
Comparatively, Sony Music’s Q3 reported last week was US$899 million.
Warner’s recorded music division generated US$770 million, with the company citing its best sellers in the three months as Ed Sheeran, Bruno Mars, Gorillaz, Clean Bandit and TWICE.
Revenue from digital downloads and other digital income fell a further 27.3% to $88 million.
On the publishing side, Warner/Chappell had its best fiscal Q3 since 2009, up 11.9% year-on-year to US$150 million (not accounting for currency shifts). Of this, its digital income was US$50 million after growing by 47%.
While revenue grew in performance and digital, mechanical revenue declined as a result of the shift to streaming. Sync revenue and operating income (at $6 million) were both flat.
Altogether, Warner Music’s net income was US$143 million, due to a one-off tax benefit. It posed a loss of US$7 million in the same quarter in 2016. The major’s net income for Q2 2017 was US$20 million.
The 20% increase in operating income to US$77 million was attributed to an expansion in digital, licensing and artist services and expanded rights revenue (including merchandising and ticketing after price hikes in the USA),
As of June 30, 2017, Warner Music had a cash balance of US$567 million, total debt of US$2.797 billion and net debt of US$2.230 billion.
“I’m proud of our team for delivering such strong results, particularly against difficult comparisons in the prior-year quarter,” said Eric Levin, Warner Music Group’s Executive Vice President and CFO.
“I’m confident that 2017 will be another strong year.”