Warner Music reported net income of $36 million in its fiscal second quarter, down 63 percent from the $96 million the company reported in the prior year quarter.
The company reported $1.48 billion in revenue in the quarter, down 1 percent from a year ago. Adjusted operating income also fell about 1 percent to $270 million.
The company attributed the drop in net income to tough comparisons to the highs of last year. Warner Music also contended with the impact of exchange rates on the company’s Euro-denominated debt resulting in a $34 million loss in the quarter after a $21 million gain in the prior-year quarter and an $11 million increase in income tax expense.
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Recorded music revenue fell about 1 percent as well, down to $1.1 billion. Publishing revenue was up about 1 percent to $310 million.
“Our strategy is starting to bear fruit, with our strongest chart presence in two years, translating to expanding new release market share in the US,” WMG CEO Robert Kyncl said in a statement. “As a result, our true strength this quarter was partially obscured by challenging comparisons with last year’s outperformance. As we replicate our strategy across other labels and geographies, and drive a virtuous cycle of greater reinvestment, we expect to deliver lasting value for artists and songwriters, and sustained growth and profitability for shareholders.”
On the company’s earnings call, Kyncl further attributed the numbers to a lighter release slate, as well as market share loss in China along with the tougher comparison to last year’s particularly robust growth. He said that “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.”
Kyncl also pointed toward upcoming releases from Ed Sheeran, Lizzo, David Guetta, Benson Boone, Alex Warren, Rosé and Teddy Swims among others as potential momentum drivers this year and building into 2026. He pointed toward double-digit spending in A&R, which he said is starting to reflect now on the charts to help improve market share. Kyncl also hinted at increased M&A activity, saying there’d be news about M&A investment plans in the “near future.”
Like Lucian Grainge did on UMG’s earnings call last week, Kyncl acknowledged a “backdrop of global uncertainty” regarding the economy but called music “the most resilient art form and currently the least expensive.”
