Warner Music Group (WMG) suffered a 7.8 percent year-over-year (YoY) revenue dip during 2022’s final three months, when net income slipped by approximately 34 percent.
The Big Three label revealed these and other performance stats for Q4 2022 (the opening quarter of Warner Music Group’s 2023 fiscal year) in an earnings report this morning. Said report is the first that WMG has published with Robert Kyncl at the helm, and the former YouTube chief business officer acknowledged that the period was a “tough quarter” for his current employer.
(Elsewhere during WMG’s Q4 earnings call, Kyncl expressed his support for ongoing streaming price increases, made clear that he’s “laser-focused on execution,” hinted at a number of expansion initiatives, and vowed to “very thoughtfully” redirect “resources to accelerate our technology investments.”)
Back to the earnings analysis, Warner Music Group generated $1.49 billion during October, November, and December of last year – down almost eight percent from the same three-month stretch in 2021, as mentioned. Within the sum, a 9.2 percent YoY jump on the publishing side (which contributed $250 million) only partially offset a 10.6 percent YoY falloff for recorded music and its $1.24 billion in Q4 2022 revenue.
Aside from the initially highlighted 34 percent net income decrease (for a total of $124 million), WMG reported operating income of $265 million for the fourth quarter (up 10.9 percent YoY), compared to OIBDA of $349 million (up 9.1 percent YoY) and adjusted OIBDA of $335 million (down 5.6 percent YoY).
Digging into the recorded income categories, Warner Music Group indicated that digital ($803 million total, down 7.7 percent YoY), physical ($133 million, down 31.8 percent YoY), and “artist services and expanded-rights” ($206 million, down 11.2 percent YoY) alike had slipped from their respective Q4 2021 levels.
Additionally, WMG communicated that recorded music’s streaming revenue ($780 million) had declined by 6.7 percent YoY. However, Q4 2021 contained an extra week, and when adjusted to factor for the seven days at hand, the Q4 2022 streaming number actually increased by 0.5 percent YoY, per the Divo owner Warner Music Group.
Besides the extra week, execs chalked up the fourth-quarter declines in part to “a lighter release schedule and a market-related slowdown in ad-supported revenue” – though Spotify last quarter posted all-time-high ad revenue of €449 million.
In any event, WMG said that recorded music’s operating income had improved slightly YoY (from $276 million to $283 million), with the category’s OIBDA having grown by 2.1 percent YoY to crack $337 million. These boosts resulted largely from “the net gain on sale of the Company’s interest in certain sound recording rights,” the DRESSX investor relayed.
Transitioning to publishing, the previously noted $250 million in Q4 2022 revenue consists specifically of $149 million from digital (up 12 percent YoY), $45 million from performance (up 18.4 percent YoY), $39 million from sync (down 7.1 percent YoY), $14 million from mechanical (flat YoY), and $3 million from other (up $1 million YoY).
Warner Chappell’s streaming revenue is said to have improved by 13.2 percent YoY (to $146 million), and publishing’s operating income grew from $32 million to $49 million across the last three months of 2021 and 2022, the report shows.
Finally, Warner Music Group had a cash balance of $720 million as of December 31st, when total debt was approaching $3.95 billion. At the time of this writing, Warner Music Group stock (NASDAQ: WMG) was down 4.66 percent from Wednesday’s close, at $34.95 per share.