Warner Music 2025 Q2 Earnings Misses Targets as Net Income Plummets 63%

Warner Music (WMG) reported its fiscal 2025 Q2 earnings on May 08th, 2025. Warner Music fell short of analyst expectations with a 0.7% decline in revenue to $1.48 billion, missing the consensus estimate of $1.52 billion. Net income also declined significantly, down 63% to $36 million. Guidance was adjusted to reflect the challenges faced during the quarter, with subscription streaming growth anticipated to be lower for the remainder of the fiscal year. Despite the setbacks, CEO Robert Kyncl remains optimistic about future growth, citing upcoming releases and reinvestment initiatives.

Revenue

The total revenue of Warner Music decreased by 0.7% to $1.48 billion in 2025 Q2, compared to $1.49 billion in 2024 Q2. Recorded Music revenue stood at $1.18 billion, with digital and physical sales accounting for $953 million. Within this segment, digital sales generated $841 million, while physical sales contributed $112 million. Artist services and expanded-rights saw revenue of $117 million, and licensing added $105 million. Music Publishing achieved $310 million in revenue, with performance bringing in $53 million, digital $188 million, mechanical $16 million, synchronization $49 million, and other $4 million. Intersegment eliminations amounted to $-1 million, culminating in total revenues of $1.48 billion.

Earnings/Net Income

Warner Music's earnings per share (EPS) fell by 61.1% to $0.07 in 2025 Q2 from $0.18 in 2024 Q2, while net income dropped 62.5% to $36 million from $96 million in the previous year. This significant decline in EPS indicates challenging financial performance.

Price Action

The stock price of Warner Music edged up 0.95% during the latest trading day but dropped 7.82% over the past week and 4.15% month-to-date.

Post-Earnings Price Action Review

The strategy of purchasing Warner Music (WMG) shares following a revenue increase and holding them for 30 days has produced poor results over the past five years, with a return of -7.44%. This performance significantly underperformed the benchmark return of 73.64%, resulting in an excess return of -81.08%. The compound annual growth rate (CAGR) stood at -1.56%, pointing to considerable losses. Additionally, the strategy experienced a high maximum drawdown of -54.20% and a negative Sharpe ratio of -0.04, reflecting substantial risk and negative returns.

CEO Commentary

"Our strategy is starting to bear fruit, with our strongest chart presence in two years, translating to expanding new release market share in the US. This quarter's performance was partially obscured by challenging comparisons with last year’s outperformance. As we replicate our strategy across other labels and geographies, and drive a virtuous cycle of greater reinvestment, we expect to deliver lasting value for artists and songwriters, and sustained growth and profitability for shareholders," said Robert Kyncl, CEO of Warner Music Group.

Guidance

"We expect to replicate our strategy across different labels and geographies, driving reinvestment initiatives that will enhance our market position. This approach is anticipated to facilitate sustained growth and profitability for our shareholders, reflecting our commitment to delivering lasting value."

Additional News

Warner Music Group has been active in mergers and acquisitions (M&A), with CEO Robert Kyncl hinting at increased M&A activity and investment plans expected to be announced soon. This aligns with the company's strategic focus on growth and reinvestment. In terms of leadership changes, former CFO Bryan Castellani is set to remain in an advisory role until the end of September, receiving a comprehensive exit package. Additionally, Warner Records has extended its deal with country singer-songwriter Zach Bryan for at least two more albums, reinforcing Warner's commitment to nurturing successful artists.