Warner Music Group (WMG) reported QQ2 2025 results that showcased modest revenue growth against a backdrop of a lighter release slate, ongoing subscription streaming headwinds versus a robust prior-year quarter, and a challenging ad market. Total revenue rose approximately 1% year over year (YoY) to about $1.484 billion, while adjusted OIBDA declined about 1% to reflect a 20.4% margin. GAAP EBITDA was $168 million with an EBIT margin of roughly 11.3%, and net income was $36 million (EPS $0.07). The company highlighted a deliberate shift in investment toward A&R to accelerate long-term top-line growth, and the early signs are positive in market share gains and chart performance. Management reiterated a three-pillar strategy: 1) grow market share, 2) grow the value of music with DSPs and pricing power, and 3) become more efficient to free capital for reinvestment and shareholder returns. Key near-term risks remain a softer-than-expected subscription growth trajectory, China market dynamics, and foreign exchange headwinds, with management signaling that the current quarter’s headwinds could persist through the fiscal year. In response, WMG is accelerating initiatives such as WMG Pulse (an artist-co-pilot data platform) and continuing M&A activity (Tempo being a notable example), while maintaining a heavy emphasis on A&R investment and catalog development to support durable growth.
From a financial health perspective, liquidity remains supported by a cash balance of $637 million and manageable debt load, though net debt totaled about $3.7 billion as of March 31, 2025, reflecting Tempo-related debt and ongoing capital allocation. Operating cash flow improved to $69 million in QQ2 2025, with free cash flow turning positive year over year at $33 million, aided by working capital timing. The company continues to evaluate capital allocation under CFO Armin Zerza and expects to refresh guidance on the next earnings call. In summary, the QQ2 2025 results underscore a recovery path under a longer-term growth framework anchored by differentiated artist development, strategic tech enablement, and disciplined capital allocation, even as near-term operating performance remains pressured by macro and industry-specific dynamics.