Warner Music Group's Q1 2025: Contradictions on Spotify Deal, Streaming Growth, and TikTok Impact

These are the key contradictions discussed in Warner Music Group's latest 2025Q1 earnings call, specifically including: Spotify deal and royalty rates, subscription streaming growth expectations, Spotify deal impact on revenue growth and wholesale pricing, and TikTok's impact on business operations:



Revenue and Earnings Growth:
- Warner Music Group reported total company revenue grew by 41% for Q1 2025, while adjusted OIBDA also increased by 41%.
- The growth was driven by increases in both recorded music revenue (4%) and music publishing revenue (7%), with subscription streaming revenue growing by 7%.

Currency Impact and FX Headwinds:
- The company faced significant FX headwinds this quarter, with a 200 basis point impact on adjusted OIBDA margin, primarily due to a strengthening dollar against key currencies like the euro and pound.
- This was attributed to over 58% of Warner Music Group's revenue being in non-U.S. dollar currencies.

Subscription Streaming Dynamics:
- Subscription streaming revenue grew by 7% in Q1 2025, expected to decelerate from last year's double-digit growth as DSP price increases were lapped.
- This growth was supported by subscriber-driven volume, with expectations for pricing improvements to additively contribute in the future.

M&A and Strategic Investments:
- Warner Music Group announced a controlling interest in Tempo Music, which includes premium music rights from artists like Bruno Mars and Adele.
- This strategic acquisition complements the company's restructuring efforts and investments in high-quality assets, aiming to enhance both short-term profit and long-term growth.