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Warner Music Group revenue top $4 bn in 2018

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Warner Music Group Corp. today announced its fourth-quarter and full-year financial results for the period ended on September 30, 2018.

In 2018, revenue exceeded $4 bn for the first time in company history while streaming revenue grew by 20.4% (18.5% in constant currency), according to the report.

“We’ve had another terrific year and revenue exceeded $4 bn for the first time in our fifteen-year history as a standalone company. We continue to invest in our business for the benefit of our recording artists and songwriters and to fuel our long-term growth,” said Steve Cooper, Warner Music Group’s CEO.

Revenue grew 13.3% (or 14.8% in constant currency). Growth in recorded music, digital, licensing, artist services, expanded-rights revenue, digital music publishing, performance, synchronization and mechanical revenue were partially offset by a decline in physical sales. Revenue grew in all regions – digital revenue grew by 21.4% (or 23.1% in constant currency), and represented 57.4% of the total revenue, compared to 53.5% in 2017.

Streaming services like Spotify and Apple Music contributed $1.73bn, up by $391m from FY 2017. Major sellers in 2018 included Ed Sheeran, The Greatest Showman soundtrack, Cardi B, Bruno Mars and Dua Lipa. Music publishing revenues at Warner/Chappell, meanwhile, hit $653m in FY 2018, up by $81 million in 2017.

“The fact that we ended the year with over $500 mn in cash, despite significant spend on A&R, marketing, M&A and dividends, is evidence of the underlying strength of our business. We’re on a great run and I’m looking forward to many more years of success,” added Eric Levin, Warner Music Group’s Executive Vice President and CFO.  

Net loss was $13 mn compared to a net loss of $38 mn in the prior-year quarter and adjusted net income was $10 mn compared to an adjusted net loss of $39 mn in the prior-year quarter.  The improvement was due to higher operating income, other income associated with prior-year-quarter losses on the company’s Euro-denominated debt due to changes in exchange rates and a prior-year-quarter non-cash loss on investments.

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Operating income was $16 mn compared to an operating loss of $1 mn in the prior-year quarter.  OIBDA (Operating income before depreciation and amortization) was $72 mn, up by 20.0% from $60 mn in the prior-year quarter and OIBDA margin increased 0.4 percentage points to 6.9% from 6.5% in the prior-year quarter. OIBDA includes an $11 mn benefit from a digital performance underpayment settlement for sound recordings offset by a $4 mn true-up of a prior-quarter advance recovery estimate and a $7 mn increase in the management fee to access as a result of higher covenant EBITDA (Earnings before interest, tax, depreciation and amortization).

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As of September 30, 2018, the company reported a cash balance of $514 mn, total debt of $2.819 bn and net debt (total long-term debt, net of deferred financing costs, minus cash) of $2.305 bn.

For the full year, publishing revenue rose 14.2% (or 11.8% in constant currency) with growth in all segments. Music publishing digital revenue rose 26.7% (or 25.4% in constant currency) reflecting the ongoing shift to streaming, and represented 36.3% of total music publishing revenue versus 32.7% in the prior year.

 

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Abhishek Singh

Author: Abhishek Singh

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