Warner Music Group Stock Slips Following Q4 FY 2021 Earnings Miss — Despite Double-Digit Revenue Growth

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Warner Music Group stock slipped after the Big Three label missed earnings estimates for the fourth quarter of its 2021 fiscal year.

Warner Music Group (NASDAQ: WMG) turned in a 22 percent year-over-year revenue increase during the fourth quarter of its 2021 fiscal year – covering the three months ending on September 30th – as digital grew by double digits on both the recorded and publishing sides.

The Big Three record label unveiled its Q4 FY 2021 financials this morning, following late-October earnings reports from Sony Music Entertainment and Universal Music Group. During July, August, and September of 2021, Warner Music Group revenue totaled $1.38 billion (up 22 percent YoY, once again), according to the company’s newest performance analysis.

Digital produced 67.3 percent of WMG’s quarterly income – at $926 million, a 19 percent YoY boost – while total debt approached $3.35 billion.

Warner Music Group Q4 FY 2021 Recorded Music Revenue

Fourth-quarter FY 2021 revenue from recorded music reached $1.172 billion (22 percent YoY growth) for WMG. Within the total, $807 million derived from digital (up 18.9 percent YoY), $127 million came from physical (up 20.95 percent YoY), $168 million is attributable to “artist services and expanded-rights” (a 71.43 percent YoY hike), and $70 million resulted from licensing (down about eight percent YoY).

Recorded music’s $807 million in quarterly digital revenue consists of $777 million in streaming income (up 22 percent YoY) and $30 million in downloads and other digital (down 25 percent YoY).

Warner Music Group Q4 FY 2021 Publishing Revenue

On the publishing front, Warner Chappell quarterly income finished at $205 million (21 percent YoY growth). Publishing revenue from digital improved by 20 percent YoY, to $120 million, and the overarching publishing-income boost was nearly identical to that which Universal Music reported for the same three-month stretch.

Besides the 20 percent digital gain for publishing, performance revenue touched $30 million (up 7.14 percent YoY) on the quarter, against $13 million for mechanical (up 30 percent YoY), $39 million for sync (up 44.44 percent YoY), and $3 million for other (down 25 percent YoY).

Warner Music Group Q4 FY 2021 – Other Financial Details

Between July’s start and September’s end, WMG’s adjusted EBITDA reached $237 million (a 34 percent YoY gain), whereas total cost and expenses, at about $1.27 billion, jumped 23 percent year over year.

And as part of the company’s approximately $7.2 billion in total assets (about $1.9 billion of which are “current”), “royalty advances expected to be recouped after one year” increased from $269 million to $457 million, compared to growth from $220 million to $373 million for advances to be collected “within one year.” However, current liabilities, including accrued royalties but not the aforementioned $3.35 billion in long-term debt, rose 16 percent YoY, to $3.15 billion.

Warner Music’s net income per share attributable to common-stock holders totaled $0.58 across the 12 months ending on September 30th, but just $0.05 (missing estimates by $0.10) during the fiscal year’s final quarter. At the time of this piece’s publishing, Warner Music Group stock – which cracked a record high of $50.23 per share in late October – was down about 6.3 percent from Friday’s close, at $45.30 per share. Notwithstanding the dip, the stock price reflects a nearly 52 percent jump from this time in 2020.

During the last month or so, Warner Music has debuted an Asia-based hip-hop label called Asiatic Records, launched Atlantic Records Benelux (which also focuses on hip-hop), and been named in a shocking lawsuit involving a photo of Tupac.