Warner Music Group Corp. (WMG) Q4 2024 Earnings Summary

Executive Summary

• Q4 FY2024 revenue was $1.63B (+3% YoY) and Adjusted OIBDA rose +11% to $353M with margin expanding +170 bps to 21.7%; Net income fell to $48M ($0.08 EPS) driven by higher restructuring and FX on euro debt .
• Recorded Music subscription streaming grew +11% (fourth consecutive double-digit quarter), while ad-supported declined −6% (Meta premium videos exit; TikTok comp) .
• Management guided to high single-digit subscription streaming growth for FY2025, ~100 bps annual margin expansion, and 50–60% OCF conversion on a multiyear basis; flagged Q1 FY2025 comparability headwinds from BMG roll-offs and prior-year license renewals .
• Capital return/catalysts: new $100M share repurchase authorization and regular quarterly dividend of $0.18 per share (paid Dec 3, 2024); expect continued momentum from strong release slate (Rose, Dua Lipa, Teddy Swims, Benson Boone) .

What Went Well and What Went Wrong

What Went Well

• “We delivered an 11% jump in Recorded Music subscription streaming revenue… fourth consecutive quarter of double-digit growth” — CEO Robert Kyncl (normalized growth) .
• Adjusted OIBDA grew +11% with margin up +170 bps to 21.7% on strong operating performance and restructuring savings .
• Shareholder returns and confidence: Board authorized a $100M repurchase; management reaffirmed multiyear margin expansion and OCF conversion targets .
• Strategic execution: India revenue up >100% in FY2024; global leadership appointments and label momentum (Atlantic/Warner Records) fueling roster diversity and market share .

What Went Wrong

• Ad-supported streaming −6% YoY (Meta exited premium music videos; lapping TikTok renewal) .
• Net income down 69% YoY to $48M due to $82M higher restructuring, $18M higher stock comp, and FX loss of $35M vs gain last year .
• Q1 FY2025 headwinds: expected unfavorable revenue impacts from BMG physical roll-off ($15–$20M), continued BMG digital roll-off (~$16M vs PYQ), and lapping a $27M digital license renewal; exit of owned media properties reduced prior-year artist services revenue by ~$20M .

Financial Results

Consolidated Metrics (USD)

Recorded Music Revenue Components (USD)

Music Publishing Revenue Components (USD)

Streaming Mix – Recorded Music (USD)

KPIs and Balance Sheet

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We delivered an 11% jump in Recorded Music subscription streaming revenue… fourth consecutive quarter of double-digit growth.” — Robert Kyncl, CEO .
• “As a result of actions taken in Q4… we now expect our restructuring plan to generate pretax cost savings of $260 million… significant majority… by the end of fiscal 2025.” — Bryan Castellani, CFO .
• “Our focus is… reduction of discounts… and more frequent PSM escalators… very obvious moves for the industry… not a zero-sum move…” — Robert Kyncl (wholesale economics) .
• “Operating cash flow conversion was 53% of adjusted OIBDA for the full year… in line with our target.” — Bryan Castellani .
• “The Board has authorized a share repurchase program of up to $100 million.” — Robert Kyncl .

Q&A Highlights

• Wholesale pricing and DSP economics: Management prioritizes wholesale (not retail), aiming to reduce discounting and add escalators; bundling can lower SAC and churn, with WMG ensuring pricing sanctity across SKUs .
• Superfan tier: WMG supportive and engaged; expects features that drive engagement and ARPU; likely collaborative with DSPs, not WMG disclosing retailer specifics .
• Ad-supported trends: Core ad-supported stable/growing; Meta renewal strong but premium video licensing exited; overall ad market tied to GDP .
• Subscription growth drivers: Subscribers, price, and share underpin high single-digit multiyear outlook; emerging markets penetration still low, providing runway .
• New revenue streams: Management is developing 2–3 additional monetization avenues (details premature) .

Estimates Context

• S&P Global consensus (EPS, revenue, EBITDA) for Q4 2024 could not be retrieved at this time due to data access limits; therefore, we cannot provide beat/miss vs Street for this quarter. Values would normally be pulled from S&P Global; unavailable in this instance.
• Actuals: Revenue $1.63B, EPS $0.08, Adjusted OIBDA $353M; investors should compare to their internal/Street datasets and factor non-GAAP items (restructuring, FX) when assessing beats/misses .
• Note: Future-period guidance comparisons should consider the specific Q1 FY2025 comparability items (BMG roll-offs, prior-year license renewal) highlighted by management .

Key Takeaways for Investors

• Subscription streaming remains resilient: fourth straight quarter of double-digit Recorded Music subscription growth; FY2025 outlook high single-digit growth supported by penetration and pricing catalysts .
• Margin trajectory positive: Adjusted OIBDA margin expanded to 21.7% in Q4; management targeting ~100 bps annual expansion and sustaining 50–60% OCF conversion multiyear .
• Near-term headwinds in Q1 FY2025: Expect revenue pressure from BMG roll-offs and lapping prior-year license renewals; set expectations accordingly for early FY2025 prints .
• Capital returns and confidence: $100M repurchase authorization and ongoing $0.18 dividend provide support; balance sheet stable with net debt ~$3.32B and improved ratings .
• Strategic focus on wholesale pricing and royalty models should support ARPU and value capture over time; watch DSP negotiations and family-plan/multi-user economics .
• Emerging markets optionality: India and other regions show strong growth and low penetration; WMG investing in local talent, distribution, and events to build share .
• Execution on reorg and catalog optimization can drive operating leverage and sustained performance as label engines (Atlantic/Warner Records) deliver high-impact releases .