Digital streaming continues to dominate, representing more than half of total revenue while downloads and physical keep sliding.
Thanks in large part to steady growth in digital streaming, Warner Music Group announced on Friday it exceeded a billion dollars in overall quarterly revenue for the first time in more than a decade. The label group saw its total revenue jump 14 percent to $1.045 billion, versus $917 million the year-prior quarter.
Digital revenue growth led the way with $533 million for the three months ended Dec. 31, representing 51 percent of total revenue. As for net income, WMG posted only $5 million for the quarter, compared to $24 million in the prior-year quarter, which it attributed to a $27 million non-cash tax expense tied to the recent tax overhaul, which in turn reduced the company’s net U.S. deferred tax assets.
For the quarter, the company posted $155 million in operating income before interest, taxes, depreciation and amortization, or OIBDA, which was down slightly from the prior quarter’s $157 million in OIBDA. It blames that dip on higher compensation, legal costs, increased investment in A&R, and costs related to its office consolidation in Los Angeles. Adjusted OIBDA, however, rose 4.3 percent to $168 million, versus $161 million the year prior. Operating income was down 4 percent to $90 million, from the year-prior’s $94 million.
Breaking out total revenue geographically, the U.S. generated $433 million, while international accounted for $614 million, minus $2 million in intersegment revenues.
“2018 is off to a great start,” said Steve Cooper, WMG’s CEO. “For three years running, we have grown revenue by double digits in the first quarter, a great testament to the sustainability of our success. Streaming is driving the industry and we continue to outperform thanks to fantastic new music and the strength of our worldwide operating team.”
The company said recorded music revenue grew in all regions during the quarter, with top sellers including Ed Sheeran, Bruno Mars, Dua Lipa, Lil Uzi Vert and Liam Gallagher. Recorded music grew 13.4 percent to $904 million, up from $797 million in the corresponding earlier period; while publishing grew 15.3 percent to $143 million from $124 million.
Recorded music operating income was $129 million, up from $123 million, while adjusted OIBDA was $183 million, up from $168 million in the prior-year quarter.
Looking closer at revenue within the recorded music segment, digital rose 20 percent to $481 million, up from $402 a year earlier. Within that, streaming accounted for $404 million, up from $311 million, and downloads $77 million, down from $91 million. That jump within digital offset a slight decline in physical sales for the period, with $223 million, versus $227 million in the corresponding year-earlier period. Elsewhere, artist services and expanded rights was up to $105 million from 90 million, while licensing and other revenues grew to $95 million from $78 million.
As for music publishing, revenue rose 15.3 percent to $143 million, up from $124 million. More than a third of that was digital revenue, which rose 23 percent to $53 million during the quarter, compared to $43 million in the prior-year quarter. According to the company, revenue grew in all segments within publishing — digital, performance, synchronization and mechanical. On that revenue, the company produced $17 million in OIBDA, up slightly from $16 million the prior year, and its operating losses totaled $1 million compared to $2 million in the prior-year quarter.