WMG Q1 Earnings Call: Lighter Release Slate and Market Headwinds Weigh on Results

Global music entertainment company Warner Music Group (NASDAQ:WMG) fell short of the market’s revenue expectations in Q1 CY2025, with sales flat year on year at $1.48 billion. Its non-GAAP profit of $0.12 per share was 58.4% below analysts’ consensus estimates.

Is now the time to buy WMG? Find out in our full research report (it’s free).

StockStory’s Take

Warner Music Group’s first quarter performance was shaped by a lighter release schedule and market share pressure in China, both of which management cited as central to the company’s flat year-on-year sales. CEO Robert Kyncl pointed to a tough comparison in subscription streaming, noting last year’s strong double-digit growth in that segment. He also highlighted the impact of a softer ad-supported streaming environment and lower concert promotion revenue, particularly in France. The company’s focus on artist and songwriter development produced notable chart successes, but Kyncl acknowledged that these early creative wins have yet to fully offset the broader industry and release calendar challenges Warner Music Group faced during the quarter.

Looking forward, Warner Music Group is prioritizing three areas: growing market share, increasing the value of music, and boosting efficiency to reinvest in music and technology. CEO Robert Kyncl explained that the company’s strategy hinges on sharpening execution, especially as it confronts persistent headwinds in subscription streaming and ongoing volatility in key international markets. Management expects the current challenges, such as the lighter release slate and pressure in China, to persist for the remainder of the year. Kyncl emphasized continued investment in A&R (Artists and Repertoire), the launch of technology tools like the WMG Pulse app for artists, and ongoing efforts to finalize digital streaming platform (DSP) renewals as core drivers for future growth.

Key Insights from Management’s Remarks

Management attributed first quarter results to a combination of challenging year-over-year comparisons, evolving market dynamics in China, and continued investment in creative and technology initiatives.

• Release schedule timing: A lighter slate of new music releases impacted revenue growth, with several high-profile albums delayed or shifted out of the quarter, a factor CEO Robert Kyncl described as an “ebb and flow” tied to artist timelines.
• China market headwinds: Warner Music Group faced market share losses in China, which management said reflected both increased competition and changes in local consumer behavior, with these trends expected to persist through the rest of the year.
• Streaming mix shift: Subscription streaming revenue grew modestly, but was held back by tough comparisons to last year’s double-digit growth and softness in ad-supported streaming due to a weaker advertising environment.
• Artist investment and development: Management highlighted notable success stories from new and established artists, crediting increased A&R investment for Warner’s strong presence on global music charts, but acknowledged these gains are not yet fully reflected in financial results.
• Technology and efficiency initiatives: The company launched WMG Pulse, a real-time data app for artists, and continued to pursue operational efficiencies, aiming to reinvest cost savings into music and tech to support long-term growth.

Drivers of Future Performance

Warner Music Group’s outlook centers on improving execution, expanding market share, and navigating persistent challenges in subscription streaming and international markets.

• Ongoing A&R and tech investment: Management plans to increase spending on artist development and digital innovation, with CEO Robert Kyncl citing the rollout of the WMG Pulse app as an example of supporting artists and driving future engagement.
• Subscription streaming and DSP renewals: The company expects muted subscription streaming growth this year, with timing of digital streaming platform deal renewals and price increases likely to impact revenue more meaningfully in 2026 rather than the current year.
• International expansion and market risks: Leadership identified growth opportunities in emerging markets such as MENA (Middle East and North Africa), Nigeria, and India, but cautioned that market-specific headwinds, notably in China, could limit near-term gains despite ongoing investment and management changes in the region.

Catalysts in Upcoming Quarters

In future quarters, the StockStory team will be monitoring (1) Warner Music Group’s ability to execute a more consistent release schedule and reduce volatility in subscription streaming, (2) progress on digital streaming platform renewals and their eventual impact on revenue, and (3) momentum in key international markets, especially in China and other high-growth regions. The pace of technology adoption and efficiency gains will also be key indicators for the company’s trajectory.

Warner Music Group currently trades at a forward EV-to-EBITDA ratio of 9.1×. Should you double down or take your chips? Find out in our full research report (it’s free).

High Quality Stocks for All Market Conditions

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.