Warner Music 2025 Q4 Earnings Revenue Surges 14.6%, Net Income Hits 20-Year High

Warner Music (WMG) reported Q4 2025 results marked by robust revenue growth and record net income, though earnings per share (EPS) fell short of estimates. Revenue exceeded expectations by 11.31% at $1.87 billion, driven by streaming and publishing gains, while EPS of $0.21 lagged forecasts by 43.24%. Management outlined 2026 guidance targeting margin expansion via cost cuts and AI-driven opportunities.

Revenue

Warner Music’s total revenue surged 14.6% year-over-year to $1.87 billion in Q4 2025, outpacing the $1.63 billion reported in the prior-year period. The growth was fueled by strong performance across both Recorded Music and Music Publishing segments. Recorded Music revenue rose 15% to $1.53 billion, while Music Publishing increased 14% to $337 million. Subscription streaming revenue grew 8.5%, reflecting market share gains in key regions and strategic DSP agreements.

Earnings/Net Income

The company’s EPS soared 163.5% to $0.21 in Q4 2025, up from $0.08 in the same period a year ago. Net income reached $109 million, a 127.1% increase from $48 million in Q4 2024, marking the highest quarterly net income in over two decades. Adjusted OIBDA rose 15% to $405 million, underscoring improved operational efficiency. Despite the EPS shortfall relative to estimates, the company’s profitability demonstrated resilience through optimized cost structures and pricing strategies.

Post-Earnings Price Action Review

The stock initially dipped 6.07% in pre-market trading following the earnings report but later recovered some ground, closing with a 2.41% gain for the day. Over the most recent full trading week, shares declined 2.14%, while the month-to-date performance showed an 11.21% decline. The mixed price action reflected investor concerns over the EPS miss and broader market volatility, though revenue outperformance provided some support. Analysts noted that the company’s strategic focus on AI licensing and margin expansion could drive long-term value, despite short-term earnings pressure.

CEO Commentary

CEO Robert Kyncl emphasized Warner Music’s proactive approach to industry challenges, highlighting a 13% revenue increase and 8.4% growth in recorded music streaming. Strategic initiatives, including optimized operational structures and new DSP agreements with “wholesale price increases,” were cited as key drivers. Kyncl also underscored progress in AI licensing, stating the company would only partner with platforms committed to licensed models. Looking ahead, he expressed confidence in 2026 momentum from hit artists, catalog revitalization, and global expansion.

Guidance

Warner Music expects strong top-line growth in 2026, supported by wholesale price increases from new DSP deals, high-margin streaming acceleration, and accretive M&A. CFO Armin Zerza outlined 150–200 basis points of adjusted OIBDA margin improvement via $200M–$300M annual cost savings. The company targets mid- to high-20s EBITDA margins over the long term, with free cash flow improvement starting in 2026. Strategic priorities include expanding distribution, capital-efficient M&A, and maintaining market share gains in core regions.

Additional News

Warner Music’s recent AI partnerships and cost-cutting measures dominated non-earnings news. The company finalized a landmark agreement with Udio to resolve litigation and launch a licensed AI music creation service in 2026, ensuring artists and songwriters retain control and compensation. Separately, Warner announced a collaboration with Stability AI to develop ethically trained tools for creators. Additionally, workforce reductions totaling 750 positions in 2025 are projected to save $300 million annually by 2027, supporting margin expansion. These initiatives underscore the company’s dual focus on innovation and operational efficiency.

Warner Music’s Q4 results reflect a balance of short-term challenges and long-term strategic momentum. While the EPS miss raised questions about profitability, revenue growth and AI-driven initiatives position the company to capitalize on evolving industry dynamics. Investors will likely monitor 2026 margin improvements and the success of AI licensing partnerships as key indicators of sustained growth.