fiscal third quarter
Filed Aug 5, 2026Robust Revenue Growth Underpinned by Strong Operating Performance across Recorded Music and Music Publishing
Total revenue increased 10.4%, operating income increased 80.5% to $305 million, Adjusted OIBDA increased 16.1% to $433 million, and cash provided by operating activities increased to $142 million.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenue, three months ended June 30, 2026GAAP | $1,864 million | – | 10.4% |
| Recorded Music revenue, three months ended June 30, 2026GAAP | $1,488 million | – | 9.9% |
| Music Publishing revenue, three months ended June 30, 2026GAAP | $377 million | – | 12% |
| Operating income, three months ended June 30, 2026GAAP | $305 million | – | 80.5% |
| Adjusted OIBDA, three months ended June 30, 2026non-GAAP | $433 million | – | 16.1% |
| Adjusted OIBDA margin, three months ended June 30, 2026non-GAAP | 23.2% | – | increased 1.1 percentage points |
| Net income, three months ended June 30, 2026GAAP | $200 million | – | – |
| Basic earnings per share, Class A shareholders, three months ended June 30, 2026GAAP | $0.39 | – | – |
| Basic earnings per share, Class B shareholders, three months ended June 30, 2026GAAP | $0.39 | – | – |
| Diluted earnings per share, Class A shareholders, three months ended June 30, 2026GAAP | $0.38 | – | – |
| Diluted earnings per share, Class B shareholders, three months ended June 30, 2026GAAP | $0.39 | – | – |
| Adjusted earnings per share, three months ended June 30, 2026non-GAAP | $0.51 | – | – |
| Net cash provided by operating activities, three months ended June 30, 2026GAAP | $142 million | – | 209% |
| Free Cash Flow, three months ended June 30, 2026non-GAAP | $114 million | – | – |
| Capital expenditures, three months ended June 30, 2026GAAP | $28 million | – | decrease of $11 million, or 28% |
| Recorded Music operating income, three months ended June 30, 2026GAAP | $326 million | – | 62% |
| Recorded Music Adjusted OIBDA, three months ended June 30, 2026non-GAAP | $377 million | – | 17% |
| Recorded Music digital revenue, three months ended June 30, 2026GAAP | $1,016 million | – | 9.4% |
| Recorded Music physical revenue, three months ended June 30, 2026GAAP | $137 million | – | – |
| Recorded Music total digital and physical revenue, three months ended June 30, 2026GAAP | $1,153 million | – | – |
| Recorded Music artist services and expanded-rights revenue, three months ended June 30, 2026GAAP | $224 million | – | – |
| Recorded Music licensing revenue, three months ended June 30, 2026GAAP | $111 million | – | remained constant with the prior-year quarter |
| Total revenue, nine months ended June 30, 2026GAAP | $5,436 million | – | 12% |
| Recorded Music revenue, nine months ended June 30, 2026GAAP | $4,348 million | – | 12% |
| Music Publishing revenue, nine months ended June 30, 2026GAAP | $1,092 million | – | 13% |
| Operating income, nine months ended June 30, 2026GAAP | $857 million | – | 56% |
| Adjusted OIBDA, nine months ended June 30, 2026non-GAAP | $1,293 million | – | 24% |
| Net income, nine months ended June 30, 2026GAAP | $556 million | – | – |
| Net cash provided by operating activities, nine months ended June 30, 2026GAAP | $708 million | – | 58% |
| Free Cash Flow, nine months ended June 30, 2026non-GAAP | $633 million | – | 88% |
| Recorded Music digital revenue, nine months ended June 30, 2026GAAP | $2,967 million | – | – |
| Recorded Music physical revenue, nine months ended June 30, 2026GAAP | $426 million | – | – |
| Recorded Music total digital and physical revenue, nine months ended June 30, 2026GAAP | $3,393 million | – | – |
| Recorded Music artist services and expanded-rights revenue, nine months ended June 30, 2026GAAP | $619 million | – | – |
| Recorded Music licensing revenue, nine months ended June 30, 2026GAAP | $336 million | – | – |
| Recorded Music operating income, nine months ended June 30, 2026GAAP | $943 million | – | 47% |
| Recorded Music Adjusted OIBDA, nine months ended June 30, 2026non-GAAP | $1,126 million | – | 23% |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Recorded MusicRevenue growth was driven by increases across digital, artist services and expanded-rights and physical revenue. | $1,488 million | – | 9.9% |
| Music PublishingThe increase in total revenue was driven in part by growth across Music Publishing synchronization, mechanical and performance revenue. | $377 million | – | 12% |
FY2026 outlook
- NoteContinue to Expect High End of 150-200 Basis Points Full-Year Margin Expansion Guidance
- NoteReiterate 50-60% Operating Cash Flow Conversion Target for FY2026
What drove it
- Total revenue was up 10.4%, or 9.3% in constant currency.
- Digital revenue was up 10.5%, or 9.1% in constant currency, and streaming revenue was up 12.3%, or 10.8% in constant currency.
- Recorded Music subscription revenue increased 12.5%, or 10.8% in constant currency, reflecting positive market share trends, subscriber growth and improved terms with DSP partners.
- Music Publishing streaming revenue increased 14.4%, or 13.8% in constant currency.
- Adjusted OIBDA and Adjusted OIBDA margin benefited from strong operating performance, revenue mix and savings from restructuring plans, a portion of which was reinvested into the business.
- Operating income benefited from a decrease in restructuring and impairment charges of $62 million.
Concerns
- Recorded Music comparisons were impacted by $16 million of digital revenue from the Copyright Settlement in the prior-year quarter.
- The BMG Termination resulted in $10 million less Recorded Music digital revenue compared to the prior-year quarter.
- Unfavorable movements in foreign currency exchange rates were approximately $16 million.
- Licensing revenue remained constant with the prior-year quarter, or decreased 0.9% in constant currency.
- Income tax expense increased by $62 million, primarily due to an increase in pre-tax income and a $20 million smaller benefit from EMP impairment.
- Total debt was $4.710 billion as of June 30, 2026.
What to watch
- Delivery of the high end of 150-200 Basis Points Full-Year Margin Expansion Guidance.
- Delivery of the 50-60% Operating Cash Flow Conversion Target for FY2026.
- Recorded Music subscription streaming growth and the effect of improved terms with DSP partners.
- The ongoing effect of the BMG Termination on Recorded Music digital and streaming revenue.
- Foreign currency exchange-rate movements.
Balance sheet and cash flow
- Cash balance as of June 30, 2026: $618 million.
- Total debt as of June 30, 2026: $4.710 billion.
- Net debt as of June 30, 2026: $4.092 billion.
- Total debt includes $303 million of subsidiary debt acquired in the acquisition of Tempo Music Holdings, LLC and $363 million in loans outstanding under the Beethoven JV.
- Cash provided by operating activities increased $96 million, or 209%, to $142 million compared to $46 million in the prior-year quarter.
- Free Cash Flow increased to $114 million from $7 million in the prior-year quarter.
Analysis
WMG reported a strong fiscal third quarter ended June 30, 2026. Total revenue increased 10.4% to $1,864 million, or 9.3% in constant currency. Excluding the $16 million Copyright Settlement in the prior-year quarter and the $10 million BMG Termination impact, total revenue increased 12.1%, or 11.0% in constant currency. Digital revenue increased 10.5% and streaming revenue increased 12.3%, providing the central contribution to reported growth.
Recorded Music revenue increased 9.9% to $1,488 million, while Music Publishing revenue increased 12% to $377 million. Recorded Music digital revenue increased 9.4% to $1,016 million, physical revenue increased to $137 million from $119 million, and artist services and expanded-rights revenue increased to $224 million from $195 million. Recorded Music licensing revenue was $111 million and remained constant with the prior-year quarter. Subscription revenue increased 12.5%, supported by positive market share trends, subscriber growth and improved terms with DSP partners.
Profitability expanded materially. Operating income increased 80.5% to $305 million, helped by a $62 million decrease in restructuring and impairment charges. Adjusted OIBDA increased 16.1% to $433 million, and Adjusted OIBDA margin increased 1.1 percentage points to 23.2% from 22.1%. Revenue mix, restructuring-plan savings and operating performance supported the result, although unfavorable foreign-exchange movements were approximately $16 million.
Net income was $200 million, compared with a loss of $16 million in the prior-year quarter. The change included a $3 million gain on the Company's Euro-denominated debt compared with a $70 million loss in the prior-year quarter, as well as a $1 million currency exchange loss on intercompany loans compared with a $63 million loss. Adjusted earnings per share was $0.51 compared with $0.42. Cash provided by operating activities rose to $142 million from $46 million, and Free Cash Flow increased to $114 million from $7 million as capital expenditures declined to $28 million from $39 million.
The company reiterated that it expects the high end of its 150-200 Basis Points Full-Year Margin Expansion Guidance and reiterated its 50-60% Operating Cash Flow Conversion Target for FY2026. Balance-sheet figures reported were $618 million of cash, $4.710 billion of total debt and $4.092 billion of net debt. Key monitoring items are the ongoing impact of the BMG Termination, foreign-exchange movements, the conversion of revenue growth into cash flow, and delivery against the stated full-year margin and cash-flow-conversion targets.
Management, verbatim
For the fifth consecutive quarter, WMG has delivered or over-delivered on our targets, proving the strength of our strategy and the momentum of our business.
Robert Kyncl, CEO, Warner Music Group
Our performance - driven by robust subscription streaming growth, market share gains, and disciplined operating leverage - highlights our ability to champion human creativity while deploying tech and AI to scale long-term profitability.
Robert Kyncl, CEO, Warner Music Group
Our strong results were highlighted by double-digit subscription streaming growth bolstered by contractual per-subscriber minimum increases and sustained global share performance.
Lou Dickler, Acting CFO, Warner Music Group
Not in the filing
stated, not guessed- Previous outlook section was not provided, so no comparison of actual results with prior guidance is available.
- GAAP gross margin was not reported in the provided filing text.
- GAAP operating expenses were not reported in the provided filing text.
- Tax rate was not reported in the provided filing text.
- Forward revenue guidance was not reported in the provided filing text.
- Forward gross-margin guidance was not reported in the provided filing text.
- Forward operating-expense guidance was not reported in the provided filing text.
- Forward tax-rate guidance was not reported in the provided filing text.
- Share repurchases and dividends were not reported in the provided filing text.
- Prior-quarter comparisons were not reported for the disclosed metrics.
- Prior-year diluted earnings per share by share class was not reported in the provided filing text.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.