Warner Music Group continues to capitalise on the music industry’s streaming-fuelled return to growth.
The major label recorded revenues of $1.05bn for the fourth quarter of 2017 – its fiscal Q1 – up 14% year-on-year. Its digital revenues grew by 20% to $533m as part of that – 51% of the total.
However, WMG’s operating income fell by 4% to $90m, while its net income dropped 79% to $5m, compared to Q4 2016’s $24m – that’s the result of a $27m non-cash tax expense related to new US tax legislation in part.
“This marks the first time in over 10 years that our quarterly revenue has exceeded a billion dollars,” said EVP and CFO Eric Levin in a statement.
“2018 is off to a great start. For three years running, we have grown revenue by double digits in the first quarter, a great testament to the sustainability of our success,” added CEO Steve Cooper.
“Streaming is driving the industry and we continue to outperform thanks to fantastic new music and the strength of our worldwide operating team.”
Why the drop in operating income?
“Largely the result of higher variable compensation expense, related to the Company’s deferred compensation plan, increased investment in A&R, the impact of a legal settlement in the prior-year quarter, costs associated with management changes and restructuring, and an increase in facilities costs due to overlap in rent associated with the Company’s Los Angeles headquarters consolidation.”
Within these results, WMG’s recorded-music division saw its revenues grow by 13.4% to $904m in Q4, with digital revenues up 20% to $481m, while music publishing revenues grew by 15% to $143m, including a 23% rise in digital revenues.
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