Company Reports

Warner Music Group is the third largest of the three major global record labels, with Vivendi’s Universal Music first and Sony Music second. Like its peers, Warner increasingly depends on streaming. Streaming services delivered 65% of total recording segment revenue in fiscal 2023, up from 30% in fiscal 2016. This percentage actually understates the overall impact of streaming, as Warner Music does not break out the streaming portion of publishing revenue separately.

Warner Music started fiscal 2024 on a positive note, showing continued growth on nearly all fronts as the top line and bottom line accelerated by double digits. The recorded music streaming and publishing segments benefited from a strong release slate in the first quarter and digital service platform price increases in the second half of 2023. We expect that further price increases and efforts to better monetize royalties will continue to attract new and established artists and drive long-term and durable growth. We maintain our $36 fair value estimate.

While Warner Music’s fiscal fourth-quarter results came in shy of our estimates, they beat consensus on the top and bottom lines as the improving demand for streaming music accelerated year-over-year growth. In the future, we think the firm will continue to benefit from the digital service providers’ higher prices. We also think that an adjusted revenue share model that Warner Music and some of its peers including Universal Music have launched with digital service provider Deezer and the continuing increase in demand for their content from consumers will drive growth. Regarding the bottom line, we expect further margin expansion driven by revenue growth, additional content monetization options, and benefits from restructuring.

Warner Music Group is the third largest of the three major global record labels, with Vivendi’s Universal Music in first and Sony Music in second. Like its peers, Warner increasingly depends on streaming. Streaming services delivered 65% of total recording segment revenue in fiscal 2023, up from 30% in fiscal 2016. This percentage actually understates the overall impact of streaming, as Warner Music does not break out the streaming portion of publishing revenue separately.

Warner Music Group is the third largest of the three major global record labels, with Vivendi’s Universal Music in first and Sony Music in second. Like its peers, Warner increasingly depends on streaming. Streaming services delivered 63% of total recording segment revenue in fiscal 2022, up from 30% in fiscal 2016. This percentage actually understates the overall impact of streaming, as Warner Music does not break out the streaming portion of publishing revenue separately.

Warner Music reported better-than-expected fiscal third-quarter results as revenue and adjusted EBITDA both beat FactSet consensus. Share traded up over 7% as recorded music streaming revenue returned to growth after four straight quarters of decline. Warner benefited from not only a stronger release slate but also growth in ad-supported streaming. Like Universal, we think Warner is well-positioned to benefit from increased streaming usage and price increases at subscription services. We are maintaining our $36 fair value estimate.

Warner Music Group is the third largest of the three major global record labels, with Vivendi’s Universal Music in first and Sony Music in second. Like its larger peers, Warner increasingly depends on streaming. Streaming services delivered 63% of total recording segment revenue in fiscal 2022, up from 30% in fiscal 2016. This percentage actually understates the overall impact of streaming, as Warner Music does not break out the streaming portion of publishing revenue separately.

Warner Music posted better-than-expected fiscal second-quarter results as revenue was in line and adjusted EBITDA was ahead of FactSet consensus. However, shares fell by over 9.5% as streaming growth decelerated at the recorded music segment. Quarterly results also suffered from the impact of economic uncertainty on ad revenue and ongoing financial currency headwinds. Despite muted growth in recorded music, we still expect the firm to benefit from deals with newer emerging platforms and price hikes at larger music streaming services. We maintain our $36 fair value estimate.

Warner Music started fiscal 2023 on a mixed note with first-quarter revenue just below and adjusted EBITDA just ahead of FactSet consensus. Streaming demand remains strong, but growth has decelerated, and foreign currency headwinds remain an issue. Results also suffered from the economic uncertainty impact on ad revenue and a tough comp that included an additional week. Despite the top-line miss, we still believe Warner Music will benefit from deals with newer emerging platforms and price hikes at music streaming services. While consumer spending may be hit by economic worries, unlimited subscriptions like music streaming have a low cost per hour of entertainment, increasing their value during economic uncertainty. We maintain our $36 fair value estimate.

Warner Music posted a strong end to fiscal 2022 with fourth-quarter revenue and adjusted EBITDA ahead of FactSet consensus. The demand for streaming music remains strong, but the growth has decelerated. In fiscal 2023, we expect the firm to benefit from not only deals with newer emerging music platforms like TikTok but also from price hikes at music streaming services. Both Apple and Deezer announced price increases recently, and we believe that peers will also raise prices. While inflation and macroeconomic worries may lower consumer spending, all you can consume subscriptions like music streaming have low cost per hour consumed, making these services more valuable to consumers in times of economic uncertainty. We are maintaining our $36 fair value estimate.

Warner Music Group is the third largest of the three major global record labels, with Vivendi’s Universal Music in first and Sony Music in second. Like its larger peers, Warner increasingly depends on streaming. Streaming services delivered 54% of total recording segment revenue in fiscal 2020, up from 30% in fiscal 2016. This percentage actually understates the overall impact of streaming, as Warner Music does not break out the streaming portion of publishing revenue separately.

Warner Music reported a weak fiscal 2022 third quarter with revenue in line and adjusted EBITDA below FactSet consensus. While the demand for streaming music remains strong with growth of 9% when normalized for currency effects and one-time issues, the growth has decelerated over the last two quarters into the single-digit range versus 24% in fiscal 2022. Warner Music’s top line also benefited from the return of live music, but this lower-margin revenue pulled down margins. We are lowering our fair value estimate to $36 from $37 to account for slightly lower streaming growth in 2022.

Warner Music Group is the third largest of the three major global record labels, with Vivendi’s Universal Music in first and Sony Music in second. Like its larger peers, Warner increasingly depends on streaming. Streaming services delivered 54% of total recording segment revenue in fiscal 2020, up from 30% in fiscal 2016. This percentage actually understates the overall impact of streaming, as Warner Music does not break out the streaming portion of publishing revenue separately.

Warner Music posted a mixed fiscal 2022 second quarter with revenue in line and adjusted EBITDA just below FactSet consensus. Demand for streaming music remains strong, with the emergence of newer platforms like Peloton and TikTok driving growth of 16%. Warner Music’s top line also benefited from the return of live music, but these lower-margin revenues limited margin expansion. We retain our $37 fair value estimate.

Warner Music reported a strong start to fiscal 2022, as the demand for streaming music remains robust. While the traditional streaming services are still expanding, the emergence of new platforms like Peloton and TikTok are helping to drive growth, which exceeded 20% for the fourth consecutive quarter. WMG also benefited from the return of live music even as COVID-19 variants continued to spread. We are increasing our fair value estimate to $37 from $33 to account for continued stronger than expected streaming growth and slightly stronger margin expansion from an improved revenue mix shift.

Warner Music Group is the third largest of the three major global record labels, with Vivendi’s Universal Music in first and Sony Music in second. Like its larger peers, Warner increasingly depends on streaming. Streaming services delivered 54% of total recording segment revenue in fiscal 2020, up from 30% in fiscal 2016. This percentage actually understates the overall impact of streaming, as Warner Music does not break out the streaming portion of publishing revenue separately.

Warner Music posted an in line end to fiscal 2021, as live music began to return, lifting artist services revenue 71% on concert promotion and merchandising. We expect that vaccinations should help live music to return in more markets in the coming quarters, though the increasing spread of the delta variant may hinder that return. Even with live music bouncing back, streaming revenue continues to grow as WMG benefited from emerging platforms. We expect to increase our $33 fair value estimate to account for continued stronger-than-expected streaming growth even as consumers have ventured back out.

Warner Music Group is the third largest of the three major global record labels, with Vivendi’s Universal Music in first and Sony Music in second. Like its larger peers, Warner increasingly depends on streaming. Streaming services delivered 54% of total recording segment revenue in fiscal 2020, up from 30% in fiscal 2016. This percentage actually understates the overall impact of streaming, as Warner Music does not break out the streaming portion of publishing revenue separately.

Warner Music posted another strong quarter as fiscal third-quarter revenue and EBITDA handily beat FactSet consensus estimates. Revenue growth was once again driven by increased consumption on both traditional streaming platforms and emerging ones like in-home fitness and live streaming. With the beginnings of a return to live music, artist services revenue was up 7% with direct-to-consumer merchandising adding to the growth. We expect vaccinations should help live music return in more markets during the second half of the year though the increasing spread of the Delta variant may hinder that return.

Warner Music reported another strong quarter as fiscal second-quarter revenue and EBITDA beat FactSet consensus estimates. Top line growth was once again driven by increased consumption on both traditional streaming platforms and emerging ones like in-home fitness and live streaming. While live music remains largely sidelined, artist services was only down 3% as direct-to-consumer merchandising is gaining steam. We expect that widespread COVID-19 vaccinations should allow live music to return in the second half of the calendar year in many markets. We are maintaining our narrow moat rating and $33 fair value estimate.