Warner Music Group (WMG), led by Robert Kyncl, posted a small year-on-year (YoY) revenue increase in the second quarter as modest growth on the publishing side offset a further decline in reported revenue.
Record label Big Three this morning released its financial results for the first quarter of 2023 (covering the company’s second quarter of fiscal 2023). According to the analysis, Warner Music Group generated nearly $1.40 billion in the first three months of this year, up about two percent from the same period in 2022 but down from about $1.49 billion. dollars in the fourth quarter.
Behind the more recent totals, WMG cited recorded music revenue of $1.14 billion (down slightly from a year ago and about $100 million per quarter) and $257 million from releases (up 12 percent year-over-year and $7 million quarterly). As an explanation for the dips, executives cited a comparatively lean first-quarter release schedule and emphasized the relative growth of the numbers in constant currencies.
“I promised to get back to you directly,” WMG CEO Robert Kyncl said during his company’s earnings conference call. “So I just want to say that while our results in music publishing were best in class, we underperformed in recorded music.” There is a lot of room for improvement and we are tackling both company-specific and industry-wide issues.”
Consistent with a slight year-over-year increase in total digital revenue for the first quarter of 2023 (and a two percent decrease in the six months ended March 31), own recorded music digital revenue decreased quarter-over-quarter to $796 million (down $8 million year-over-year). breakdown shows.
Rounding out the intake side is WMG: $118 million comes from physical sales such as vinyl and CDs (down $4 million year-on-year and $15 million sequentially), $131 million from artist services ( down 7.09 percent year-over-year and $75 million for the quarter) and $98 million from licenses (up 22.5 percent year-over-year and essentially flat for the quarter).
In addition, recorded music operating income fell 20 percent year-over-year to $151 million and OIBDA fell 19 percent year-over-year to $203 million, the source said. In light of the numbers, Kyncl voiced support for streaming price hikes, signaling that Warner Music, like Universal Music Group, is working with platforms to develop “different streaming models.”
“The recent price increases have been successful and point in the right direction,” said the former YouTube CEO, “but they should only be the first step.” creative community took the financially prudent action. There are no signs that churn is increasing.
“At the same time, WMG has started experimenting with different streaming models. I cannot list all of these benefits as the terms of the contract are confidential. But this is just the beginning and we will continue to work with our partners on new paradigms,” continued Kyncl, who expects his company to generate nearly $50 million annually (and $20 million in this fiscal year) through the layoffs, it was announced in March.
In the transition to Warner Chappell, publishing revenue is said to have increased 12 percent year-on-year to $257 million, as noted earlier, as WMG reported double-digit year-over-year increases in performance (up 25 percent), digital ( nearly 15 percent) and operating income (a 37 percent improvement to $52 million) and OIBDA (a 23 percent increase to $75 million).
Elsewhere in WMG’s Q1 2023 earnings report and conference call, Kyncl struck a mostly upbeat tone when discussing the far-reaching implications of artificial intelligence (“with the right expertise, it will be a powerful tool for the music industry”). The 53-year-old also underscored the perceived importance of the “unprecedented” proprietary technology WMG is currently developing.
“The music part of the company gives them a warm welcome (in-house technology),” explained Kyncl. “Because everyone sees what a force multiplier this can be to all of the activities that we do, which is artist development and artist and songwriter marketing. It’s an exciting journey to be a part of. And I can’t stress enough how unprecedented this is. But of course we have to prove this through the products we design and our delivery.”
At the time of writing, Warner Music (NASDAQ: WMG), which Vanguard owns a significant portion of, is down about 11 percent from Monday’s close of $25.32 per share.