Executive Summary

Q2 FY25 revenue missed consensus ($1.48B vs $1.52B*) and EPS missed ($0.12 Primary EPS vs $0.28*) amid a lighter release slate, market share pressure in China, and softer ad-supported streaming; GAAP EPS was $0.07 .
Operating income rose 41% YoY to $168M on sharply lower restructuring/impairment charges; Adjusted OIBDA was $303M with margin down 50 bps to 20.4% .
Management signaled lower subscription streaming growth than previously expected for the remainder of FY25, citing tough comps, ad weakness, China, and slate timing, but reiterated long-term confidence as chart momentum builds and WMG Pulse launches .
Dividend declared at $0.18 per share for payment June 3, 2025; CFO transition to Armin Zerza (ex-Activision Blizzard) effective May 5, 2025 supports operational focus and capital allocation initiatives .

What Went Well and What Went Wrong

What Went Well

Operating income +41% YoY (to $168M) on reduced restructuring/impairment charges; Recorded Music operating margin improved 600 bps YoY to 17.3% .
Music Publishing Adjusted OIBDA +4% YoY and margin +60 bps to 27.4%, driven by revenue mix and digital/performance/sync growth .
Strategic execution advances: “our strategy is starting to bear fruit, with our strongest chart presence in two years...” (CEO), and launch of WMG Pulse app to put real-time insights in artists’ hands .

What Went Wrong

Topline softness: total revenue -0.7% YoY (constant currency +1.2%); Recorded Music -1.2% (constant currency +0.7%) amid lighter release slate, market share loss in China, and ad-supported decline .
Net income -63% YoY to $36M, pressured by FX loss on EUR debt ($34M loss vs $21M gain prior year) and hedging losses, plus higher tax expense .
Ad-supported streaming -4.7% (Recorded Music), reflecting a soft ad environment; company cautioned subscription streaming growth will be lower than previously expected in FY25 due to tough comps and China .

Financial Results

Summary vs Prior Periods

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Billions)	$1.630	$1.666	$1.484
Operating Income ($USD Millions)	$143	$214	$168
Operating Margin (%)	8.8%	12.8%	11.3%
Adjusted OIBDA ($USD Millions)	$353	$363	$303
Adjusted OIBDA Margin (%)	21.7%	21.8%	20.4%
GAAP EPS ($/share)	$0.08	$0.45	$0.07

Q2 2025 Actual vs S&P Global Consensus (Primary EPS, Revenue)

Metric	Consensus	Actual
Revenue ($USD Billions)	$1.521*	$1.484
Primary EPS ($/share)	$0.285*	$0.119*

Values marked with * retrieved from S&P Global.

Segment Detail – Recorded Music Revenue (Q2 FY25 vs Q2 FY24)

Category ($USD Millions)	Q2 2024	Q2 2025	YoY
Digital	$848	$841	-0.8%
Physical	$111	$112	+0.9%
Total Digital & Physical	$959	$953	-0.6%
Artist services & expanded-rights	$126	$117	-7.1%
Licensing	$104	$105	+1.0%
Total Recorded Music	$1,189	$1,175	-1.2%

Drivers: Subscription streaming +1.1% (+3.2% cc); ad-supported -4.7% (-2.9% cc); China market share loss; softer ad market; physical up on new releases in U.S. & Japan; licensing up on deals in Japan/U.S. .

Segment Detail – Music Publishing Revenue (Q2 FY25 vs Q2 FY24)

Category ($USD Millions)	Q2 2024	Q2 2025	YoY
Performance	$52	$53	+1.9%
Digital	$187	$188	+0.5%
Mechanical	$15	$16	+6.7%
Synchronization	$48	$49	+2.1%
Other	$4	$4	—
Total Music Publishing	$306	$310	+1.3%

KPIs

KPI	Q4 2024	Q1 2025	Q2 2025
Recorded Music Streaming ($USD Millions)	$866	$854	$825
Recorded Music Subscription ($USD Millions)	$645	$631	$622
Recorded Music Ad-Supported ($USD Millions)	$221	$223	$203
Cash from Operations ($USD Millions)	$304	$332	$69
Free Cash Flow ($USD Millions)	$271	$296	$33
Capital Expenditures ($USD Millions)	$33	$36	$36
Cash & Equivalents ($USD Millions)	$694	$802	$637
Total Debt ($USD Billions)	$4.014	$3.955	$4.292
Net Debt ($USD Billions)	$3.320	$3.153	$3.655
OCF Conversion (% of Adj. OIBDA)	86% (304/353)	82% (332/403)	23% (per mgmt)
Weighted Avg Cost of Debt (%)	4.3%	4.2%	4.1%

Note: Q2 OCF conversion was cited by management as 23% .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Recorded Music subscription streaming growth	FY25	High single-digit growth (reaffirmed Q1)	Lower than previously expected for remainder of FY25	Lowered
Adjusted OIBDA margin expansion	FY25	Unable to reaffirm FY25 due to FX; 100 bps per year target remains multi-year	Too early to update; will revisit next call; multi-year target intact	Maintained long-term; near-term cautious
Operating cash flow conversion	Multi-year	50–60% of Adj. OIBDA target	Target unchanged; Q2 conversion 23%	Maintained
Dividend	Q2 2025	—	$0.18/share payable June 3, record May 27	Initiated/Declared
Capital allocation / M&A	FY25	Tempo stake acquired; disciplined M&A focus	Expect more M&A/investment news near-term	Reinforced

Earnings Call Themes & Trends

Topic	Q4 2024 (prior)	Q1 2025 (prior)	Q2 2025 (current)	Trend
AI/technology initiatives	Replatforming tech; digital transformation	Spotify multi-year deal; platform innovation	Launch of WMG Pulse app; NO FAKES Act advocacy	Accelerating
Tariffs/macro/FX	FX headwinds, restructuring costs	FX headwind ~200 bps to margin; hedging below OIBDA	FX loss on EUR debt; ad softness persists	Persistent headwinds
Product performance (release slate)	Strong subscription streaming; chart momentum (Dua Lipa, etc.)	Strong new releases (Linkin Park, Rose, Charli XCX)	Lighter slate; new releases later; strongest chart presence in 2 years	Mixed near-term; stronger pipeline
Regional trends	Growth in Japan, India early moves	Guidance on BMG roll-off; global subscriber trends	Market share pressure in China; progress in MENA/Nigeria/India	China pressure; EM expansion
Regulatory/legal	—	Artist-centric royalties & deals	NO FAKES Act support; name/image/voice rights	Building momentum
A&R/R&D execution	A&R investment +11% in FY24	Double-digit A&R increase; Tempo acquisition	A&R spend to increase further; reinvest savings	Increasing

Management Commentary

“Our strategy is starting to bear fruit, with our strongest chart presence in two years… As we replicate our strategy across other labels and geographies… we expect to deliver lasting value…” — Robert Kyncl, CEO .
“This week, we invited 100 artists and songwriters to use [WMG Pulse]… we’re confident we’ll drive more consistent long-term growth and profitability.” — Robert Kyncl .
“We expect these challenges we experienced this quarter to persist for the remainder of the fiscal year, resulting in lower subscription streaming growth than previously expected.” — Robert Kyncl .
“Q2 operating cash flow increased to $69 million… Operating cash flow conversion was 23% of adjusted OIBDA.” — Bryan Castellani .

Q&A Highlights

Subscription streaming cadence/guidance: Management now expects similar trends to Q2 through FY25; deceleration vs “high single-digit” previously guided due to comps and China .
China impact: Market share loss in China weighed on subscription; trend expected to continue near-term .
Wholesale pricing and DSP deals: Progress with Amazon/Spotify to align economics (wholesale focus); innovation on tiers/bundles/superfan expected to be additive over time .
Ad-supported trends: Macro-driven; stabilization over time, but lapping prior renewals creates noise; TikTok exposure muted near-term .
Margins/FX: FX headwinds (2–3% rev/OIBDA) weigh on near-term margin expansion; hedging below OIBDA .
A&R investment focus: Unproven A&R up double digits percentage-wise; near-term expense but strategic .

Estimates Context

Q2 FY25: Revenue missed S&P Global consensus ($1.484B vs $1.521B*); Primary EPS missed ($0.119* vs $0.285*). GAAP EPS was $0.07 (press release). Values retrieved from S&P Global.
Forward look: S&P Global consensus indicates Q3 FY25 revenue ~$1.591B* and Primary EPS ~$0.294*, Q4 FY25 revenue ~$1.685B* and EPS ~$0.333*. Values retrieved from S&P Global.
Implications: Expect sell-side to trim near-term subscription streaming growth assumptions (China, comps), reduce ad-supported trajectory, and temper margin expansion timelines given FX and reinvestment.

Key Takeaways for Investors

Near-term negative: Both revenue and Primary EPS missed consensus; management lowered FY25 subscription streaming growth expectations — expect estimate cuts and heightened sensitivity to pipeline timing .
Quality of earnings improved: Operating income up 41% on lower restructuring costs; Recorded Music operating margin expanded 600 bps YoY, signaling structural cost progress despite mix pressure .
Structural tailwinds in-flight: Amazon/Spotify deal constructs and wholesale pricing focus, plus superfan/bundle innovation, can re-accelerate monetization into FY26 as pricing dynamics percolate .
Watch China and ad-supported: Continued China market share pressure and fragile ad market remain headwinds; diversify via Japan/U.S. physical and licensing growth .
Liquidity/Leverage: Net debt $3.655B, cash $637M; weighted average cost of debt 4.1%; dividend declared ($0.18) balances reinvestment with shareholder returns .
Execution focus: WMG Pulse rollout and rising A&R spend aim to sustain chart/share momentum; but slate timing variability can drive quarterly volatility .
Positioning: Medium-term thesis intact — subscriber growth, pricing optimization, artist-centric economics, and M&A (Tempo, more planned) underpin margin and cash conversion targets over multi-year horizon .

Additional relevant press releases in Q2 FY25:

CFO appointment: Armin Zerza as EVP & CFO effective May 5, 2025 .
5 Junction JV (South Asian talent): partnership with Anjula Acharia to scale presence in North America .
Dividend declaration: $0.18 per share payable June 3, 2025 .

Warner Music Group Corp. (WMG)·Q2 2025 Earnings Summary