Warner Music Group (NASDAQ:WMG) Announces Earnings Results

Key Points

• Warner Music beat expectations: Quarterly EPS was $0.51 versus the $0.34 consensus, while revenue reached $1.86 billion compared with estimates of $1.81 billion.
• Streaming drove growth: Recorded-music subscription streaming revenue increased 12%, supported by subscriber gains, pricing, and market-share growth. Management expects slight acceleration in the next quarter, including contributions from the Apple deal.
• Outlook remains positive: Warner reaffirmed targets for high-single-digit revenue growth, double-digit Adjusted OIBDA and EPS growth, and continued margin expansion. AI licensing partnerships are expected to become materially additive beginning in fiscal 2027.

Warner Music Group (NASDAQ:WMG - Get Free Report) posted its quarterly earnings data on Wednesday. The company reported $0.51 earnings per share (EPS) for the quarter, beating analysts' consensus estimates of $0.34 by $0.17, FiscalAI reports. The company had revenue of $1.86 billion for the quarter, compared to analyst estimates of $1.81 billion. Warner Music Group had a net margin of 6.34% and a return on equity of 62.01%.

Here are the key takeaways from Warner Music Group's conference call:

• Positive Sentiment: Warner Music reported strong Q3 momentum, with adjusted revenue up 11%, Adjusted OIBDA up 18%, and Adjusted EPS up 21%; operating cash flow increased 209% and cash rose by roughly $100 million.
• Positive Sentiment: Recorded-music subscription streaming revenue grew 12%, driven by 6%–7% subscriber growth, approximately 3.5 percentage points from pricing, and about 1 percentage point from market-share gains. Contractual wholesale price increases now cover 88% of subscription-streaming revenue, and management expects a slight acceleration in Q4, including the Apple deal.
• Positive Sentiment: Management reaffirmed its targets for high-single-digit revenue growth, double-digit Adjusted OIBDA and EPS growth, and 50%–60% operating-cash-flow conversion. The company remains on track for the high end of its 150–200 basis-point fiscal 2026 margin-expansion target, supported by cost savings, catalog growth, and operating leverage.
• Neutral Sentiment: Warner said AI licensing partnerships, including Suno, are expected to contribute materially to subscription-streaming revenue beginning in fiscal 2027, while the company continues working through complex artist permissioning and safeguards against unauthorized AI content. Armin Zerza’s departure as CFO led to an interim appointment for Lou Dickler, with a permanent CFO search underway.

Warner Music Group Stock Performance

NASDAQ:WMG traded up $0.20 during midday trading on Wednesday, reaching $26.00. 2,718,909 shares of the company traded hands, compared to its average volume of 2,379,049. The firm has a market capitalization of $13.56 billion, a price-to-earnings ratio of 30.59, a price-to-earnings-growth ratio of 0.36 and a beta of 1.30. The company has a fifty day moving average price of $28.39 and a 200 day moving average price of $28.78. The company has a debt-to-equity ratio of 5.62, a current ratio of 0.73 and a quick ratio of 0.71. Warner Music Group has a twelve month low of $23.34 and a twelve month high of $35.42.

Warner Music Group Dividend Announcement

The business also recently declared a quarterly dividend, which was paid on Tuesday, June 2nd. Investors of record on Tuesday, May 26th were issued a $0.19 dividend. The ex-dividend date of this dividend was Tuesday, May 26th. This represents a $0.76 annualized dividend and a dividend yield of 2.9%. Warner Music Group's dividend payout ratio (DPR) is 89.41%.

Analysts Set New Price Targets

WMG has been the subject of a number of analyst reports. Sanford C. Bernstein reissued an "outperform" rating on shares of Warner Music Group in a research report on Friday, May 8th. Weiss Ratings restated a "hold (c)" rating on shares of Warner Music Group in a report on Wednesday, June 24th. Wall Street Zen cut Warner Music Group from a "buy" rating to a "hold" rating in a research note on Saturday, July 18th. Zacks Research cut shares of Warner Music Group from a "strong-buy" rating to a "hold" rating in a report on Monday, June 22nd. Finally, Evercore reiterated an "outperform" rating and set a $43.00 price objective on shares of Warner Music Group in a research note on Friday, May 8th. Fourteen investment analysts have rated the stock with a Buy rating and four have issued a Hold rating to the stock. Based on data from MarketBeat.com, the company has an average rating of "Moderate Buy" and a consensus price target of $38.43.

Hedge Funds Weigh In On Warner Music Group

Several institutional investors have recently modified their holdings of WMG. FIL Ltd lifted its position in Warner Music Group by 0.8% in the 4th quarter. FIL Ltd now owns 5,880,751 shares of the company's stock valued at $180,363,000 after purchasing an additional 47,760 shares during the last quarter. Millennium Management LLC increased its stake in shares of Warner Music Group by 22.0% in the fourth quarter. Millennium Management LLC now owns 3,885,483 shares of the company's stock valued at $119,168,000 after purchasing an additional 701,829 shares during the period. UBS Group AG raised its holdings in shares of Warner Music Group by 112.8% during the third quarter. UBS Group AG now owns 2,226,151 shares of the company's stock valued at $75,823,000 after buying an additional 1,180,256 shares during the last quarter. Fairview Capital Investment Management LLC boosted its position in shares of Warner Music Group by 12.1% during the fourth quarter. Fairview Capital Investment Management LLC now owns 1,664,349 shares of the company's stock worth $51,046,000 after buying an additional 179,245 shares during the period. Finally, DigitalBridge Group Inc. grew its holdings in Warner Music Group by 13.8% in the 4th quarter. DigitalBridge Group Inc. now owns 1,292,717 shares of the company's stock worth $39,648,000 after buying an additional 156,384 shares in the last quarter. Institutional investors own 96.88% of the company's stock.

Warner Music Group Company Profile

Warner Music Group is a major global music company that operates across recorded music and music publishing. Its recorded-music business comprises a portfolio of well-known labels—including Atlantic, Warner Records and Parlophone—as well as distribution and artist-services operations that support both established and emerging artists. The company's publishing arm, Warner Chappell Music, manages songwriting catalogs and administers rights for compositions across multiple media, providing licensing for film, television, advertising and other commercial uses.

WMG's activities span the full music value chain: signing and developing artists, producing and marketing recordings, distributing music through physical channels and streaming platforms, and monetizing rights through licensing, synchronization and neighboring-rights collection.

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