Warner Music Group Corp. (WMG) Q3 2025 Earnings Summary

Executive Summary

Revenue reaccelerated to $1.69B (+8.7% YoY; +7.0% CC), driven by Recorded Music digital, artist services, licensing, and strong Music Publishing growth; Adjusted OIBDA rose 18% to $373M with margin expanding 180 bps to 22.1% .
GAAP EPS was a loss of $0.03, primarily due to a $70M FX loss on euro-denominated debt and $8M hedging losses; restructuring and impairment charges also elevated, compressing GAAP operating margin despite OIBDA gains .
Versus Street: Revenue beat consensus ($1.689B vs $1.591B)* and EBITDA beat ($357M vs $340M), but EPS missed (Primary EPS $0.25 vs $0.29); headline GAAP EPS was -$0.03, highlighting non-operational FX headwinds (S&P Global consensus) .
Catalysts: management emphasized U.S. market share gains, subscription streaming momentum, a $1.2B Bain Capital catalog JV, and ongoing cost-savings initiatives targeting 150–200 bps margin expansion by FY26 .
Dividend: Board declared a $0.19 quarterly cash dividend (paid Sep 3, 2025; record Aug 20, 2025), reinforcing capital-return continuity .

What Went Well and What Went Wrong

What Went Well

Adjusted OIBDA growth and margin expansion: Adjusted OIBDA +18% to $373M; margin +180 bps to 22.1%, helped by revenue mix, acquisitions, and cost savings from the 2024 Strategic Restructuring Plan .
Streaming subscription strength and market share: Subscription streaming grew 5.3% (4.2% CC) in Recorded Music; management highlighted U.S. market share gains and chart success across geographies/genres. “This quarter we delivered massive chart hits, breakthrough stars, strong revenue growth, and market share gains…all of which show our strategy is working,” — CEO Robert Kyncl .
Music Publishing broad-based growth: Revenue +10.2% (+9.4% CC) with strength in performance (+11.5%), synchronization (+28.6%), and mechanical (+23.1%); Adjusted OIBDA +21.5% and margin +270 bps to 28.6% .

What Went Wrong

GAAP net loss and EPS: Net loss of $16M (vs $141M net income LY) and GAAP EPS of -$0.03, driven by $70M FX loss on euro debt and $8M hedging losses; restructuring/impairments rose to $69M .
Ad-supported softness: Recorded Music ad-supported streaming revenue declined 0.9% (1.8% CC), reflecting a soft ad environment .
Cash generation pressure: Operating cash flow fell to $46M (-76% YoY) and FCF to $7M (-96% YoY), driven by higher A&R spend, working capital movements, and increased tech capex (+39% YoY to $39M) .

Financial Results

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Millions)	$1,666	$1,484	$1,689
Operating Income ($USD Millions)	$214	$168	$169
Adjusted OIBDA ($USD Millions)	$363	$303	$373
Adjusted OIBDA Margin (%)	21.8%	20.4%	22.1%
Net Income (Loss) ($USD Millions)	$241	$36	$(16)
GAAP Diluted EPS (Class A/B)	$0.45	$0.07	$(0.03)
Cash from Operations ($USD Millions)	$332	$69	$46
Free Cash Flow ($USD Millions)	$296	$33	$7

Segment breakdown (revenue):

Segment ($USD Millions)	Q2 2025	Q3 2025
Recorded Music – Digital	$841	$929
Recorded Music – Physical	$112	$119
Recorded Music – Artist Services & Expanded Rights	$117	$195
Recorded Music – Licensing	$105	$111
Total Recorded Music	$1,175	$1,354
Music Publishing – Performance	$53	$58
Music Publishing – Digital	$188	$204
Music Publishing – Mechanical	$16	$16
Music Publishing – Synchronization	$49	$54
Music Publishing – Other	$4	$4
Total Music Publishing	$310	$336

KPIs:

KPI	Q2 2025	Q3 2025
Recorded Music Streaming – Subscription ($USD Millions)	$622	$674
Recorded Music Streaming – Ad-Supported ($USD Millions)	$203	$221
Recorded Music Streaming – Total ($USD Millions)	$825	$895
Consolidated Streaming ($USD Millions)	$1,010	$1,097
Adjusted OIBDA Margin (%)	20.4%	22.1%

Notable adjustments and items (context):

Copyright Settlement: $16M Recorded Music digital revenue in Q3 2025; DSP True-Up in PY $22M .
BMG Termination: -$14M YoY impact in Q3 (physical -$10M; streaming -$4M) .
Restructuring/impairments: $69M in Q3 2025 vs $1M PY .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Recorded Music Subscription Streaming Revenue	FY2025	Reaffirmed full-year guidance (Q1)	No new numeric update in Q3 call; focus on market share gains, subscription momentum	Maintained
Operating Cash Flow Conversion	FY2025	Reaffirmed full-year guidance (Q1)	No new numeric update; reiterated long-term growth drivers	Maintained
Margin Expansion Target	FY2026	150–200 bps expansion tied to ~$300M cost savings plan (prior commentary)	Reaffirmed trajectory in Q3 call	Maintained
Dividend	Quarterly	$0.19 declared regularly	$0.19 declared (payable Sep 3, 2025; record Aug 20, 2025)	Maintained

Note: No explicit numeric revenue/EPS guidance ranges were provided in the Q3 materials; management emphasized long-term growth, margin expansion, and strategic initiatives .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2025)	Previous Mentions (Q2 2025)	Current Period (Q3 2025)	Trend
Subscription Streaming Momentum	Reaffirmed full-year Recorded Music subscription guidance; healthy global subscriber trends	Subscription up 1.1% (3.2% CC); ad-supported -4.7%	Subscription up 5.3% (4.2% CC); adjusted subscription +9.8% ex-items	Improving
U.S. Market Share	—	—	Management cited ~1 ppt YoY U.S. market share gain (Luminate), led by Atlantic/Warner Records	Positive
Catalog Strategy	Tempo controlling stake acquisition; disciplined M&A	—	$1.2B Bain Capital JV for iconic catalogs; expanding catalog monetization	Expanding
Cost Savings & Margin	2024 Strategic Restructuring Plan in motion	Savings helping OIBDA; lower restructuring vs PY	Cost savings drive OIBDA; Q3 restructuring spike tied to non-core e-tailer impairments; long-term margin target reaffirmed	Structurally positive; near-term noisy
Ad-Supported Environment	—	Soft ad environment hurting ad-supported revenue	Ad-supported down 0.9% (1.8% CC)	Soft
China/Regional Mix	—	Lighter release slate and market share loss in China impacted streaming	Licensing deals in U.K./China; strength across EMEA/APAC/LatAm; APAC leadership appointment	Mixed but improving
Distribution (ADA)	—	—	ADA strengthened via dual role appointment to scale indie distribution	Strategic build
FX/Hedging Impact	Favorable FX gains, hedging gains boosted GAAP NI	FX loss $34M; hedging losses $6M	FX loss $70M; hedging losses $8M drive GAAP loss	Headwind

Management Commentary

“This quarter we delivered massive chart hits, breakthrough stars, strong revenue growth, and market share gains…all of which show our strategy is working.” — Robert Kyncl, CEO .
“We’re focused on accelerating growth in our core business, expanding margins, and deploying capital in ways that strengthen our creative and financial impact.” — Armin Zerza, CFO .
Call emphasis: subscription streaming momentum on an adjusted basis; reaffirmed long-term margin expansion tied to ~$300M cost-savings plan; U.S. market share up ~1 ppt; Bain JV for catalog acquisitions .

Q&A Highlights

Analysts probed sustainability of subscription streaming growth versus ad-supported softness; management pointed to chart success and share gains, with ad headwinds deemed macro/transient .
Margin trajectory and restructuring: management reiterated long-term 150–200 bps margin expansion by FY26; near-term charges tied to non-core e-tailer impairments and reinvestment in technology .
Capital deployment: Bain catalog JV to support accretive catalog expansion while maintaining balance sheet flexibility; dividend maintained .
Regional dynamics: strength across EMEA/APAC/LatAm; APAC leadership steps to accelerate growth and infrastructure .

Estimates Context

Metric	Consensus	Actual	Surprise
Revenue ($USD)	$1,591,333,490*	$1,689,000,000	+$97,666,510*
EBITDA ($USD)	$339,888,060*	$357,000,000*	+$17,111,940*
Primary EPS ($USD)	$0.2936*	$0.2451*	-$0.0485*
GAAP Diluted EPS ($USD)	—	$(0.03)	—

Values marked with * retrieved from S&P Global. Warner reports Adjusted OIBDA of $373M (+18% YoY) versus EBITDA consensus; headline GAAP EPS was -$0.03 due to FX/hedging losses, while S&P “Primary EPS” normalized actual printed ~$0.25 (miss vs ~$0.29 consensus)* .

Key Takeaways for Investors

Revenue/OIBDA beat with margin expansion; headline EPS miss driven by non-operational FX/hedging, not core fundamentals — positive for underlying trend .
Subscription streaming and U.S. market share gains are driving core inflection; ad-supported softness remains a macro headwind but less material to profit mix .
Strategic optionality increasing: $1.2B Bain JV positions WMG to scale high-margin catalog assets; distribution (ADA) and APAC leadership moves strengthen growth platforms .
Cost-savings and reinvestment balance: near-term restructuring charges and tech capex weigh on GAAP metrics, but are consistent with long-term 150–200 bps margin expansion by FY26 .
Cash generation dipped on A&R and working capital, but dividend continuity underscores confidence; monitor FCF trajectory into Q4 as releases and advances normalize .
Estimate revisions: Expect upward adjustments to revenue/EBITDA on demonstrated momentum; EPS models should incorporate FX sensitivity and restructuring cadence (GAAP vs normalized spread)* .
Near-term trading: Revenue/OIBDA beat and strategic JV announcements are supportive; GAAP EPS optics may cap upside until FX/hedging and restructuring normalize. Medium-term thesis: margin expansion, catalog ROI, and share gains in subscription streaming.

Additional references

Q3 2025 press release and 8-K financials .
Q2 2025 8-K (trend context) .
Q1 2025 8-K (guidance context, catalog investment) .
Bain Capital JV press release .
Transcript coverage and call highlights .