Warner Music Group, home to Cardi B, Ed Sheeran and Bruno Mars, reported an increase in second-quarter revenue on Tuesday, driven by digital growth.
Earnings for the latest period fell to $92 million from $117 million a year ago, “primarily due to total realized and unrealized losses in the market value of certain investments.”
Quarterly operating income, however, increased to $166 million from $151 million a year earlier, and operating income before amortization (OIBDA) climbed to $255 million from $228 million, “mainly due to increased income”.
On an earnings conference call, Warner Music CEO Steve Cooper described music subscription services as “tacky,” arguing that it’s different from video streamers whose subscribers are constantly searching for the latest desirable content. “As the world grapples with war, inflation, and other macro-economic issues, one thing is certain: the ubiquity and value of music has already proven resilient to any type of disruption,” did he declare. “Unlike the video streaming market, which spins as subscribers constantly search for new and different exclusive content, the music streaming market is sticky.”
He argued that users not only have “access to all the music they could want on one platform,” but also become especially “attached to the collections and playlists they’ve curated over the years. time”. Cooper concluded, “While movies and TV shows may come and go, the devotion to one’s favorite music and artist runs deeper and more enduring.”
Before the market opened, the music major posted a 10.1%, or 12.1% at constant exchange rate, jump in revenue for the latest quarter, which ended March 31, to $1.38 billion, amid digital growth in recorded music and music publishing operations. .
Total streaming revenue increased 9.0%, or 11.6% at constant currencies, driven by growth “in recorded music and music publishing, including revenue from emerging streaming platforms “.
In recorded music, top sellers in the second fiscal quarter included Ed Sheeran, Michael Bublé, Dua Lipa and Red Hot Chili Peppers. Recorded music revenue rose 8.3%, or 11.4% in constant currency, last quarter. The company cited “growth across all revenue lines, including increases in digital revenue that reflect continued growth in streaming, the company’s largest revenue stream.” Digital revenue increased 6.3%, or 8.8% in constant currency, licensing revenue jumped 19.4%, or 23.1% in constant currency, driven by higher sync activity, and physical revenue increased by 3.4%, or 8.0% in constant currency.
Music publishing revenues increased by 19.8%, or 23.0% at constant exchange rates. The gain was driven by growth “across all revenue lines,” the company said. Digital revenue jumped 22.1%, or 25.7%, “reflecting continued growth in streaming, including emerging streaming platforms, and the timing of new digital offerings.” Sync revenue increased due to increased commercial licensing activity, while performance revenue increased “as bars, restaurants, concerts and live events continued to recover from the COVID-related disruptions,” the company said.
“Warner Music Group’s unique combination of scale and agility gives us, our artists and songwriters an edge in the ever-expanding universe of opportunity in music,” said CEO Cooper. “We continue to build on our unparalleled expertise in artist development, our differentiated approach to global expansion, and our groundbreaking commitment to innovation at the intersection of music, games, social media and entertainment. fitness.”
Chief Financial Officer Eric Levin added, “The underlying health and resilience of our business is reflected in the broad-based revenue growth we achieved in the second quarter. As our core business continues to thrive, new growth vectors are constantly emerging.