Warner Music Stock In Focus On Profit Slump, But Retail’s Still Singing Along

Shares of Warner Music Group Corp ($WMG) were in the spotlight on Friday after the company reported its fourth-quarter earnings with revenue topping Wall Street estimates but earnings falling short of expectations.

WMG saw fourth-quarter (Q4) revenue rise 3% year-over-year (YoY) to $1.63 billion compared to an estimate of $1.598 billion. Earnings per share (EPS) came in at $0.08 compared to an analyst estimate of $0.30. Net income declined 69% YoY to $48 million during the quarter.

Recorded Music revenue rose 4% YoY to $1.34 billion. The segment’s revenue growth was unfavorably impacted by the termination of the distribution agreement with BMG, which resulted in $25 million less revenue compared to the prior-year quarter.

Music publishing revenue fell 1% YoY to $295 million during the quarter. The firm indicated that revenue growth was unfavorably impacted by a ruling by the Copyright Royalty Board in Phonorecords III upholding higher percentage of revenue U.S. mechanical royalty rates.

The firm’s operating income fell to $143 million compared to $212 million in the prior-year quarter. The firm said there was an increase in restructuring charges of $82 million compared to the prior-year quarter in connection with its restructuring plan announced in February 2024.

As of Sept. 30, 2024, the company reported a cash balance of $694 million, total debt of $4.014 billion and net debt of $3.320 billion, compared to $3.323 billion at the end of the prior year.

Following the announcement, retail sentiment on Stocktwits jumped into the ‘bullish’ territory (62/100) compared to ‘bullish’ a day ago.

WMG’s Sentiment Meter and Message Volume as of 7:51 a.m. ET on Nov. 22, 2024 | Source: Stocktwits

Shares of WMG closed over 7% on Thursday. The stock has lost nearly 13% since the beginning of the year.

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