Warner Music Group’s first-quarter results for 2025 were met with a negative market reaction, as the company reported flat sales and non-GAAP profits well below Wall Street expectations. Management attributed the underperformance to a lighter release schedule, continued market share pressure in China, and a challenging comparison in subscription streaming following strong growth in the prior year. CEO Robert Kyncl acknowledged that “our results…reflect a lighter release schedule, market share pressure in China and a tough year-over-year comparison in subscription streaming.”
Is now the time to buy WMG? Find out in our full research report (it’s free).
Warner Music Group (WMG) Q1 CY2025 Highlights:
- Revenue: $1.48 billion vs analyst estimates of $1.52 billion (flat year on year, 2.2% miss)
- Adjusted EBITDA: $303 million vs analyst estimates of $334.9 million (20.4% margin, 9.5% miss)
- Operating Margin: 11.3%, up from 8% in the same quarter last year
- Market Capitalization: $14.18 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Warner Music Group’s Q1 Earnings Call
- Michael Morris (Guggenheim Securities) asked about Warner Music’s path back to growth, given current headwinds. CEO Robert Kyncl pointed to the company’s strategy of increasing A&R investment and technology upgrades as early signs of progress.
- Benjamin Black (Deutsche Bank) inquired about scaling in emerging markets and the impact of market share loss in China. Kyncl confirmed continued focus on global expansion, with a new Head of Asia joining soon, and acknowledged that China’s challenges are likely to persist.
- Kutgun Maral (Evercore ISI) questioned the timing of digital streaming deal renewals and their benefit to revenue. Kyncl indicated these would mostly impact results in subsequent years, noting more work remains before full benefits are realized.
- Batya Levi (UBS) pressed for clarity on subscription streaming growth and the effect of release schedule variability. Kyncl explained that tough prior-year comparisons, ad market softness, and timing of releases all contributed to the current growth slowdown.
- Stephen Laszczyk (Goldman Sachs) asked about A&R investments and margin outlook. Kyncl and departing CFO Bryan Castellani highlighted a shift toward investing in high-value repertoire and acknowledged that increased A&R spending, along with digital investments and foreign exchange, are influencing margins.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be tracking (1) the performance and chart impact of upcoming major releases from established and emerging artists, (2) tangible progress in market share within key territories like the U.S. and high-growth international regions, and (3) the effectiveness of technology initiatives such as WMG Pulse in enhancing artist engagement and operational efficiency. We’ll also monitor updates on M&A activity and cost-saving execution.
Warner Music Group currently trades at $27.20, down from $30.09 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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