Warner Music Group starts year with 16.7% revenue growth; investing in A&R and digital innovation

Warner Music Group began 2018 in a growth position, according to the company’s fiscal Q2 report.

In the three months to March 31, the music giant reported total revenue growth of 16.7% (or up 10.4% in constant currency), netting US$791 million.

Digital revenue jumped 24.8% (up 19.7% in constant currency), and now represents 56.8% of total income compared to 53.2% in the prior-year quarter.

OIBDA was up 7.8% from $141 million in the prior-year quarter to $152 million.

“We’re having another excellent year with strong momentum around the world in both recorded music and music publishing,” Warner Music Group’s CEO Steve Cooper enthused.

“We’re investing heavily in A&R, digital innovation and the transformation of our operations to ensure that we are positioned for long-term success.”

The group’s executive vice president and CFO Eric Levin added: “We showed strong revenue and OIBDA growth in our second quarter.

“This is our eleventh consecutive quarter of year-over-year revenue growth and we’re proud of our ability to deliver robust results on a consistent basis.”

Streaming now consists of 52.5% of the company’s recorded revenues, after climbing 38.3% year-on-year to $415 million.

The Q2 report also indicates that the streaming format injected an extra $115 million into the major label’s coffers.

Physical music sales rose to $147 million (the rise related to currency), while more successful sync tie-ups and higher broadcast fees saw licensing revenue gather ground.

Downloads fell by $24 million to $76 million, and declines in artist services and expanded-rights revenue also had an impact on the quarter.

Warner’s biggest sellers this year were Ed Sheeran, The Greatest Showman soundtrack, Bruno Mars, Japanese rock band WANIMA and Dua Lipa.

Warner’s publishing arm Warner/Chappell Music had strong yields too, up 20% year-on-year (or 13.7% in constant currency) to $174 million in the three months.

Of this, digital represented $57 million.

Warner/Chappell Music grew on all grounds – digital (by 33%), synchronisation and mechanical – although operating income was flat at $41 million, while OIBDA grew slightly (just 3%) to $60 million.

Across Warner Music Group – including recorded music and publishing operations – revenue grew 16.7% (or 10.4% in constant currency) to $963 million.

Of course, the next quarterly report will indicate something completely different for Warner Music Group, given the news that they’ve sold off 75% of their Spotify equity for a tidy sum of $400 million.