Earnings: Warner Music Group Q2 Digital Revs Rise 39 Percent; Net Loss Reduced
This story was written by David Kaplan.
Considering the wider decline of the traditional music industry, Warner Music Group (NYSE: WMG) had a pretty good quarter, as the company's Q2 net loss narrowed to $9 million from $17 million and revenues gained 5 percent to $848 million from $804 million. But the high point was digital revenue, which was up 39 percent to $166 million year-over-year for WMG, which houses such record labels as Asylum, Atlantic, Bad Boy, Elektra, Nonesuch, Reprise, Rhino and others. Sequentially, digital revenues grew a slight 1 percent from Q1's $164 million. The digital segment now makes up roughly 20 percent of WMG's total revenues. Other highlights from WMG's Q2 included:
-- Op income from continuing operations grew 10.9 percent to $51 million from $46 million in the prior-year quarter and operating margin from continuing operations increased 0.3 percentage points to 6 percent.
-- U.S. revenue fell 6.5 percent. International revs were up 17.2 percent, and grew 3.6 percent on a constant-currency basis. On a constant-currency basis, revenue increased in Europe and Canada.
-- Recorded Music revenue increased 5.1 percent from the prior-year quarter to $686 million, and was down 1.0 percent on a constant-currency basis, again reflecting the declines in U.S. sales. Domestic Recorded Music digital revenue amounted to $101 million or 31.7 percent of total U.S. Recorded Music revenue. Digital sales strength came mostly from global online downloads, and to a lesser extent growth in international mobile.
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By David Kaplan