Warner Music Group said on Thursday that revenues increased 7% during its fiscal second quarter to $1.5 billion, with the company pointing to the strength of its publishing business and a boost in subscription streaming revenue in recorded music.
Hits like Teddy Swims‘ “Lose Control” and Benson Boone’s “Beautiful Things” drove an 11% increase in recorded music streaming revenue, including a 13% uptick in subscription streaming revenue. Swims and Boone held the No. 1 and 2 spots on the Billboard Hot 100 songs chart in the first quarter, while Megan Thee Stallion‘s “Hiss” debuted in the No. 1 spot in February.
“This quarter, we saw massive hits from artists across different genres and all stages of development – exactly the kind of mix we want,” said WMG CEO Robert Kyncl on a call with investors. “[The increase in streaming revenue] was driven by stronger music performance as well as subscriber growth and subscription price increases.”
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Recorded music revenue grew by 4% to $1.19 billion overall in the quarter compared to a year ago, as the termination of Warner’s distribution agreement with BMG was a drag on the division’s streaming and digital revenue growth and made for a challenging year-ago comparison. Excluding the impact of BMG terminating its distribution agreement and not renewing its digital license deal with WMG, total revenues were up 8.8%.
Music publishing revenue grew by 19% to $306 million as WMG songwriters’ contributions to hits like Jack Harlow’s “Lovin On Me,” Ariana Grande’s “We Can’t Be Friends” and Kanye West and Ty Dolla $ign’s “Carnival” drove a more than 30% uptick in music publishing streaming revenue.
Kyncl said Warner’s growing global market share in music publishing was thanks to organic growth — like signing decorated British singer/songwriter Raye early in her career. But it was the company’s inorganic growth plans that generated the first question from analysts on the company’s earnings conference call.
In April, WMG called off plans to submit a binding offer to acquire French music company Believe.
“We decided not to pursue it for a variety of reasons that I cannot go into,” Kyncl said in response to an analyst’s question about the decision. “We have a clear strategy in expanding our offerings to serve more artists across a wider array of their careers. We are building against that … We always look at ways to accelerate beause all of this work takes time. Any time there is an option in the market to accelerate our roadmaps, we will look at it.”
Ultimately, the acquisition and bidding process for Believe pushed Warner to disclose publicly it was considering making an offer, but the time WMG had to conduct due dilligence was brief and “not in our control,” Kyncl said, which also played a part in WMG walking away.
The company is “staying vigilant about M&A opportunities” that could enhance it’s goal of providing “lower-touch services that many independent artists, labels and songwriters rely on.”
Warner Chappell announced a partnership with BandLab and its artist service platform ReverbNation that aims to provide administration and a full-service JV tier to develop BandLab’s most promising writers.
A former YouTube executive and advocate for technology and music, Kyncl ended the call with a plug for “Where That Came From,” an AI-generated song by Grammy-award winning country star Randy Travis. Travis has suffered from aphasia since 2013, limiting his ability to sing. That he was able to release new music for the first time in years last week, was “a wonderful example of what is possible with AI,” Kyncl said.