Warner Music Revenue Growth Slows as Margins Expand
Adjusted operating income before depreciation and amortization rose 16.1% to $433 million.
Warner Music Group (WMG), the music entertainment company, reported slower fiscal third-quarter sales growth while widening margins across its recorded-music and publishing businesses.
Revenue rose 10.4% from a year earlier to $1.864 billion, easing from 16.7% growth in the second quarter. Constant-currency growth slowed to 9.3% from 12.1%, though revenue increased 7.6% sequentially.
Net income swung to $200 million from a $16 million loss a year earlier and increased from $181 million in the preceding quarter. The improvement reflected smaller foreign-exchange losses and the absence of the prior-year period’s $70 million EMP impairment.
Recorded Music revenue increased 9.9% to $1.488 billion, compared with 17% growth in the second quarter. Streaming growth moderated to 11.8% from 16.5%, as subscription revenue rose 12.5% and ad-supported revenue increased 10.0%. Artist-services and expanded-rights revenue climbed 14.9%, physical revenue rose 15.1% and licensing revenue was flat.
Music Publishing revenue advanced 12.2% to $377 million, slowing from 14% growth in the prior quarter. Publishing streaming revenue increased 14.4%, compared with 20.0% growth in the second quarter.
Profitability continued to improve despite the slower revenue trajectory. Adjusted OIBDA margin expanded 1.1 percentage points to 23.2%, while operating income rose 80.5% to $305 million, helped by a $62 million reduction in restructuring and impairment charges. Recorded Music’s adjusted margin widened 1.6 percentage points to 25.3%, and Music Publishing’s margin edged up to 28.9%.
Warner reiterated that fiscal 2026 adjusted OIBDA margin expansion is expected to reach the high end of its 150-to-200-basis-point target and maintained its 50%-to-60% operating-cash-flow conversion target.
Operating cash flow more than tripled to $142 million, while free cash flow climbed to $114 million from $7 million. Capital spending fell 28% to $28 million as technology and finance-transformation investment declined, giving Warner stronger cash generation as streaming growth cooled.