Warner Music posts “robust growth” in Q1

Warner Music Group (WMG) announced “robust growth in revenue” in its first fiscal quarter ending December 1.

Total revenue grew 2.4% (or 11.1% on a constant-currency basis) to US$849 million. This was aided by an 18% boost (or 25.2% on a constant-currency basis) in digital sales. Streaming revenue offset declines in download sales.

WMG’s operating income nearly tripled to $62 million. Net income was $28 million, a change from the net loss of $41 million in the prior year quarter.

“We delivered another strong quarter, thanks to great music from our artists and excellent execution from our worldwide team,” said CEO Stephen Cooper. “Subscription streaming is a major driver of our growth and streaming revenue remains on a trajectory to become our largest revenue source.”

“We achieved robust growth in revenue, OIBDA, margin and cash flow,” added Eric Levin, WMG’s Executive Vice President and CFO. “I am also pleased with our recently announced plans to redeem $50 million of our senior notes with cash on hand, which will further strengthen our balance sheet.”

Major sellers in Q1 included Coldplay, Ed Sheeran, Enya, Johnny Hallyday and Jess Glynne.

Warner Music Group explained, “Growth in Recorded Music digital, licensing and artist services and expanded-rights revenue as well as growth in Music Publishing digital revenue was partially offset by declines in Recorded Music physical revenue and Music Publishing mechanical, performance and synchronisation revenue.

“On a regional basis, as-reported revenue grew in the U.S., Latin America and Asia, offset by currency-related declines across Europe. Digital revenue grew 18.0% (or 25.2% in constant currency), and represented 41.0% of total revenue, compared to 35.6% in the prior-year quarter. Streaming revenue growth more than offset declines in download revenue.”

Expanding on its Music Publishing figures, revenue declined 2.5% (or increased 6.4% in constant currency). Growth in digital revenue was offset by currency-related declines in performance and synchronization revenue as well as declines in mechanical revenue reflecting the ongoing shift to digital.

As of December 31, 2015, WMG reported a cash balance of $278 million, total debt of $2.986 billion and net debt (total long-term debt, including the current portion, minus cash) of $2.708 billion.