Warner Music Group Corp.

Previous wording

•Results of operations. This section provides an analysis of our results of operations for the three and nine months ended June 30, 2025 and June 30, 2024. This analysis is presented on both a consolidated and segment basis.

Current wording

•Results of operations. This section provides an analysis of our results of operations for the three months ended December 31, 2025 and December 31, 2024. This analysis is presented on both a consolidated and segment basis.

Previous wording

•Financial condition and liquidity. This section provides an analysis of our cash flows for the nine months ended June 30, 2025 and June 30, 2024, as well as a discussion of our financial condition and liquidity as of June 30, 2025. The discussion of our financial condition and liquidity includes recent debt financings and a summary of the key debt covenant compliance measures under our debt agreements.

Current wording

•Financial condition and liquidity. This section provides an analysis of our cash flows for the three months ended December 31, 2025 and December 31, 2024, as well as a discussion of our financial condition and liquidity as of December 31, 2025. The discussion of our financial condition and liquidity includes recent debt financings and a summary of the key debt covenant compliance measures under our debt agreements.

Previous wording

We evaluate our operating performance based on several factors, including our primary financial measure of operating income (loss) before non-cash depreciation of tangible assets and non-cash amortization of intangible assets adjusted to exclude the impact of non-cash stock-based compensation and other related expenses and certain items that affect comparability including but not limited to gains or losses on divestitures and expenses related to restructuring and transformation initiatives (“Adjusted OIBDA”). We consider Adjusted OIBDA to be an important indicator of the operational strengths and performance of our businesses. However, a limitation of the use of Adjusted OIBDA as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our businesses. Accordingly, Adjusted OIBDA should be considered in addition to, not as a substitute for, operating income (loss), net income (loss) attributable to Warner Music Group Corp. and other measures of financial performance reported in accordance with United States generally accepted accounting principles (“U.S. GAAP”). In addition, our definition of Adjusted OIBDA may differ from similarly titled measures used by other companies. A reconciliation of consolidated Adjusted OIBDA to operating income (loss) and net income (loss) attributable to Warner Music Group Corp. is provided in our “Results of Operations.”

Current wording

We evaluate our operating performance based on several factors, including Adjusted OIBDA. We define Adjusted OIBDA as operating income (loss) adjusted to exclude the following items: (i) non-cash depreciation of tangible assets, (ii) non-cash amortization of intangible assets, (iii) non-cash stock-based compensation and other related expenses, (iv) gains or losses on divestitures, (v) expenses related to restructuring and transformation initiatives, which includes costs associated with the Company’s financial transformation initiative to design and implement new information technology and upgrade our finance infrastructure, and (vi) executive transition costs. Items excluded are not viewed to contribute directly to management’s evaluation of operating results. We consider Adjusted OIBDA to be an important indicator of the operational strengths and performance of our businesses. However, a limitation of the use of Adjusted OIBDA as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our businesses. Accordingly, Adjusted OIBDA should be considered in addition to, not as a substitute for, operating income (loss), net income (loss) attributable to Warner Music Group Corp. and other measures of financial performance reported in accordance with United States generally accepted accounting principles (“U.S. GAAP”). In addition, our definition of Adjusted OIBDA may differ from similarly titled measures used by other companies. A reconciliation of consolidated Adjusted OIBDA to operating income (loss) and net income (loss) attributable to Warner Music Group Corp. is provided in our “Results of Operations.”

Previous wording

We are one of the world’s leading music entertainment companies. Our renowned family of iconic record labels, including Atlantic Records, Warner Records, Elektra Records and Parlophone Records, is home to many of the world’s most popular and influential recording artists. In addition, Warner Chappell Music, our global music publishing business, boasts an extraordinary catalog that includes timeless standards and contemporary hits, representing works by over 180,000 songwriters and composers, with a global collection of more than one and a half million musical compositions. We classify our business interests into two fundamental operations: Recorded Music and Music Publishing. A brief description of each of those operations is presented below.

Current wording

We are one of the world’s leading music entertainment companies. Our renowned family of iconic record labels, including Atlantic Records, Warner Records, Elektra Records and Parlophone Records, is home to many of the world’s most popular and influential recording artists. In addition, Warner Chappell Music, our global music publishing business, boasts an extraordinary catalog that includes timeless standards and contemporary hits, representing works by over 190,000 songwriters and composers, with a global collection of more than one and a half million musical compositions. We classify our business interests into two fundamental operations: Recorded Music and Music Publishing. A brief description of each of those operations is presented below.

Previous wording

In the United States, our Recorded Music business is conducted principally through our major record labels—Atlantic Records and Warner Records. In October 2018, we launched Elektra Music Group in the United States as a standalone label group, which comprises the Elektra, Fueled by Ramen and Roadrunner labels, and in December 2021, we acquired 300 Entertainment and subsequently launched 300 Elektra Entertainment, or 3EE, a frontline label group that brings together the multi-genre power of 300 Entertainment and Elektra Music Group. Our Recorded Music business also includes Rhino Entertainment, a division that specializes in marketing our recorded music catalog through compilations, reissuances of previously released music and video titles and releasing previously unreleased material from our vault. We also conduct our Recorded Music business through a collection of additional record labels including Asylum, Big Beat, Canvasback, East West, Erato, FFRR, Nonesuch, Parlophone, Reprise, Sire, Spinnin’ Records, TenThousand Projects, Warner Classics and Warner Music Nashville.

Current wording

In the United States, our Recorded Music business is conducted principally through our major record labels—Atlantic Records and Warner Records. Our Recorded Music business also includes Rhino Entertainment, a division that specializes in marketing our recorded music catalog through compilations, reissuances of previously released music and video titles and releasing previously unreleased material from our vault. We also conduct our Recorded Music business through a collection of additional record labels including Asylum, Big Beat, Canvasback, East West, Erato, FFRR, Nonesuch, Parlophone, Reprise, Sire, Spinnin’ Records, TenThousand Projects, Warner Classics and Warner Records Nashville.

Previous wording

Outside the United States, our Recorded Music business is conducted in more than 70 countries through various subsidiaries, affiliates and non-affiliated licensees. Internationally, we engage in the same activities as in the United States: discovering and signing artists and distributing, selling, marketing and promoting their music. In most cases, we also market, promote, distribute and sell the music of those recording artists for whom our domestic record labels have international rights. In certain smaller markets, we license the right to distribute and sell our music to non-affiliated third-party record labels.

Current wording

Outside the United States, our Recorded Music business is conducted through various subsidiaries, affiliates and non-affiliated licensees. Internationally, we engage in the same activities as in the United States: discovering and signing artists and distributing, selling, marketing and promoting their music. In most cases, we also market, promote, distribute and sell the music of those recording artists for whom our domestic record labels have international rights. In certain smaller markets, we license the right to distribute and sell our music to non-affiliated third-party record labels.

Previous wording

Our Recorded Music business’ operations include WMX, a next generation services division that connects artists with fans and amplifies brands in creative, immersive, and engaging ways. This division includes a rebranded WEA commercial services & marketing network (formerly Warner-Elektra-Atlantic Corporation, or WEA Corp.), which markets, distributes and sells music and video products to retailers and wholesale distributors, as well as acting as the Company’s media and creative content arm. Our business’ distribution operations also include Alternative Distribution Alliance (“ADA”), which markets, distributes and sells the products of independent labels to retail and wholesale distributors; and various distribution centers and ventures operated internationally.

Current wording

Our Recorded Music business’s operations include WMX, a next generation services division that connects artists with fans and amplifies brands in creative, immersive, and engaging ways. This division includes a rebranded WEA commercial services and marketing network (formerly Warner-Elektra-Atlantic Corporation, or WEA Corp.), which markets, distributes and sells music and video products to retailers and wholesale distributors, and enhances relationships with fans by creating artist merchandise, which we operate, market and sell across various channels, including e-commerce and retail. and through touring. Our business’s distribution operations also include Alternative Distribution Alliance (“ADA”), which markets, distributes and sells the products of independent labels to retail and wholesale distributors; and various distribution centers and ventures operated internationally.

Previous wording

The operations of our Music Publishing business are conducted principally through Warner Chappell Music, our global music publishing company headquartered in Los Angeles, with operations in over 70 countries through various subsidiaries, affiliates, and non-affiliated licensees and sub-publishers. We own or control rights to more than one and a half million musical compositions, including numerous pop hits, American standards, folk songs and motion picture and theatrical compositions. Assembled over decades, our award-winning catalog includes over 180,000 songwriters and composers and a diverse range of genres including pop, rock, jazz, classical, country, R&B, hip-hop, rap, reggae, Latin, folk, blues, symphonic, soul, Broadway, electronic, alternative and gospel. Warner Chappell Music also administers the music and soundtracks of several third-party television and film producers and studios. We have an extensive production music catalog collectively branded as Warner Chappell Production Music.

Current wording

The operations of our Music Publishing business are conducted principally through Warner Chappell Music, our global music publishing company headquartered in Los Angeles, through various subsidiaries, affiliates, and non-affiliated licensees and sub-publishers. We own or control rights to more than two million musical compositions, including numerous pop hits, American standards, folk songs and motion picture and theatrical compositions. Assembled over decades, our award-winning catalog includes over 190,000 songwriters and composers and a diverse range of genres including pop, rock, jazz, classical, country, R&B, hip-hop, rap, reggae, Latin, folk, blues, symphonic, soul, Broadway, electronic, alternative and gospel. Warner Chappell Music also administers the music and soundtracks of several third-party television and film producers and studios. We have an extensive production music catalog collectively branded as Warner Chappell Production Music.

Previous wording

In 2024, the Company announced a strategic restructuring plan (the “2024 Strategic Restructuring Plan”) designed to free up additional funds to invest in music and accelerate the Company’s growth for the next decade. The 2024 Strategic Restructuring Plan is substantially complete and the remaining associated cash payments are expected to be made by the end of fiscal year 2026.

Current wording

In 2024, the Company announced a strategic restructuring plan (the “2024 Strategic Restructuring Plan”) designed to free up additional funds to invest in music and accelerate the Company’s growth for the next decade. The 2024 Strategic Restructuring Plan is complete and the remaining associated cash payments are expected to be made by the end of fiscal year 2026.

Previous wording

The cost savings under the 2024 Strategic Restructuring Plan will be achieved through a combination of the disposal or winding down of non-core operations, continuing to manage overhead, sharpening focus, expanding shared services, and implementing previously disclosed expected operational efficiencies made possible by the Company’s financial transformative initiative. The Company expects allocating a majority of the costs savings to increase investment in the Company’s core Recorded Music and Music Publishing businesses, new skill sets and tech capabilities.

Current wording

The cost savings under the 2024 Strategic Restructuring Plan will be achieved through a combination of the disposal or winding down of non-core operations, continuing to manage overhead, sharpening focus, expanding shared services, and implementing previously disclosed expected operational efficiencies made possible by the Company’s financial transformative initiative. The Company allocated a majority of the costs savings to increase investment in the Company’s core Recorded Music and Music Publishing businesses, new skill sets and tech capabilities.

Previous wording

In September 2023, the Company terminated its distribution agreement with BMG as BMG began to bring digital distribution in-house and license directly with digital service partners in fiscal 2024 while also licensing its physical distribution with a different provider (the “BMG Termination”). Alternative Distribution Alliance (“ADA”), which is part of our Recorded Music business, had previously been distributing BMG’s recorded music catalog and revenues are reported within our Recorded Music segment. The shift to digital direct deals by BMG is a phased in-sourcing of distribution during the current fiscal year and we expect BMG to be rolled off by the end of the current fiscal year.

Current wording

In September 2023, the Company terminated its distribution agreement with BMG as BMG began to bring digital distribution in-house and license directly with digital service partners in fiscal 2024 while also licensing its physical distribution with a different provider (the “BMG Termination”). Alternative Distribution Alliance (“ADA”), which is part of our Recorded Music business, had previously been distributing BMG’s recorded music catalog and revenues are reported within our Recorded Music segment. The shift to digital direct deals by BMG was a phased in-sourcing of distribution during the prior fiscal year with BMG rolled off at the end of the prior fiscal year.

Previous wording

Total revenues increased by $135 million, or 9%, to $1,689 million for the three months ended June 30, 2025 from $1,554 million for the three months ended June 30, 2024. Revenue growth was favorably impacted by the settlement of certain copyright infringement cases (the “Copyright Settlement”), which resulted in $16 million higher Recorded Music revenue. The prior-year quarter included $22 million of incremental revenue recognized in Recorded Music from a Digital Service Provider (“DSP”) for performance obligations satisfied in previous periods (the “DSP True-Up Payments”). Recorded Music revenue growth was also unfavorably impacted by the BMG Termination, which resulted in $14 million less Recorded Music revenue compared to the prior-year quarter. The increase in total revenue includes $24 million of favorable currency exchange fluctuations. Prior to intersegment eliminations, Recorded Music and Music Publishing revenues represented 80% and 20% of total revenue for each of the three months ended June 30, 2025 and June 30, 2024, respectively. Prior to intersegment eliminations, U.S. and international revenues represented 43% and 57% of total revenues for the three months ended June 30, 2025, respectively, and 44% and 56% of total revenues for the three months ended June 30, 2024, respectively.

Current wording

Total revenues increased by $174 million, or 10%, to $1,840 million for the three months ended December 31, 2025 from $1,666 million for the three months ended December 31, 2024. Revenue growth was impacted by a digital revenue settlement of $12 million in the quarter and a $7 million downward revenue true-up in the prior-year quarter (the “DSP True-Up and Settlement Payments”). Recorded Music revenue growth was also unfavorably impacted by the BMG Termination, which resulted in $6 million less Recorded Music digital revenue compared to the prior-year quarter. Music Publishing revenue was impacted by $17 million of revenue in the prior-year quarter recognized in connection with historical matched royalties that were processed to date by the Mechanical Licensing Collective (the “MLC Historical Matched Royalties”). Adjusted for these items, total revenues increased by $178 million, or 11%, which includes $52 million of favorable currency exchange fluctuations. Prior to intersegment eliminations, Recorded Music and Music Publishing revenues represented 80% and 20% of total revenue for the three months ended December 31, 2025, respectively, and 81% and 19% of total revenue for the three months ended December 31, 2024, respectively. Prior to intersegment eliminations, U.S. and international revenues represented 42% and 58% of total revenues for each of the three months ended December 31, 2025 and December 31, 2024.

Previous wording

Total digital revenues after intersegment eliminations increased by $57 million, or 5%, to $1,132 million for the three months ended June 30, 2025 from $1,075 million for the three months ended June 30, 2024. Total streaming revenue increased by $42 million, driven by growth in Recorded Music and Music Publishing. Total streaming revenue includes $11 million of favorable currency exchange fluctuations. Prior to intersegment eliminations, total digital revenues for the three months ended June 30, 2025 were composed of U.S. revenues of $535 million and international revenues of $598 million, or 47% and 53% of total digital revenues, respectively. Prior to intersegment eliminations, total digital revenues for the three months ended June 30, 2024 were composed of U.S. revenues of $504 million and international revenues of $572 million, or 47% and 53% of total digital revenues, respectively.

Current wording

Total digital revenues after intersegment eliminations increased by $108 million, or 10%, to $1,190 million for the three months ended December 31, 2025 from $1,082 million for the three months ended December 31, 2024. Total streaming revenue increased by $113 million, driven by growth in Recorded Music and Music Publishing. Total streaming revenue includes $30 million of favorable currency exchange fluctuations. Prior to intersegment eliminations, total digital revenues for the three months ended December 31, 2025 were composed of U.S. revenues of $534 million and international revenues of $657 million, or 45% and 55% of total digital revenues, respectively. Prior to intersegment eliminations, total digital revenues for the three months ended December 31, 2024 were composed of U.S. revenues of $508 million and international revenues of $572 million, or 47% and 53% of total digital revenues, respectively.

Previous wording

The overall increase in Recorded Music revenue was driven by increases in digital, artist services and expanded-rights and licensing revenues, partially offset by a decrease in physical revenue. Digital revenue increased by $47 million, or 5%, which includes a favorable impact of currency exchange fluctuations of $10 million. Revenue from streaming services increased by $32 million to $895 million for the three months ended June 30, 2025 from $863 million for the three months ended June 30, 2024. The increase in streaming revenue was driven by subscription streaming growth and includes a favorable impact of foreign currency exchange rates of $9 million, partially offset by the unfavorable impact of the DSP True-Up Payments and the BMG Termination of $4 million in the prior-year quarter. Download and other digital revenues increased by $15 million, or 79%, to $34 million for the three months ended June 30, 2025 from $19 million for the three months ended June 30, 2024 due to the impact of the Copyright Settlement of $16 million, partially offset by the continued shift to streaming services. Licensing revenue increased by $21 million, or 23%, driven by higher licensing activity primarily in the U.K. and China, and timing of other copyright infringement settlements. Licensing revenue includes a favorable impact of foreign currency exchange rates of $3 million. Artist services and expanded-rights revenue increased by $36 million, or 23%, due to higher concert promotion revenue primarily in France and Spain, and a favorable impact of foreign currency exchange rates of $4 million. Physical revenue, which includes a favorable impact of foreign currency exchange rates of $4 million, decreased by $1 million, or 1%, as growth from strong releases in Korea and Japan was offset by the $10 million impact of the BMG Termination. Top sellers in the quarter included BAEKHYUN, ROSÉ, Bruno Mars, Grateful Dead, and Teddy Swims.

Current wording

The overall increase in Recorded Music revenue was driven by increases in digital, artist services and expanded-rights and licensing revenues, partially offset by a decrease in physical revenue. Digital revenue increased by $103 million, or 12%, which includes a favorable impact of currency exchange fluctuations of $26 million, primarily due to growth in streaming revenue as a result of the continued growth in streaming services, including growth in subscription and ad-supported revenues. Revenue from streaming services increased by $106 million, or 12%, to $960 million for the three months ended December 31, 2025 from $854 million for the three months ended December 31, 2024. Adjusted for the impacts of the DSP True-Up and Settlement Payments in the current and prior-year quarters and the BMG Termination in the prior-year quarter, Recorded Music streaming revenue increased $93 million, or 11%, to $948 million for the three months ended December 31, 2025 from $855 million for the three months ended December 31, 2024. Download and other digital revenues decreased by $3 million, or 16%, to $16 million for the three months ended December 31, 2025 from $19 million for the three months ended December 31, 2024. Artist services and expanded-rights revenue increased by $35 million, or 18%, due to higher concert promotion revenue primarily in France, and a favorable impact of foreign currency exchange rates of $9 million. Licensing revenue increased by $11 million, or 10%, driven by higher licensing activity, a $2 million increase in copyright infringement settlements in the quarter, and a favorable impact of foreign currency exchange rates of $3 million. Physical revenue, which includes a favorable impact of foreign currency exchange rates of $5 million, decreased by $14 million, or 8%, primarily driven by strong releases in Japan and Korea in the prior-year quarter. Top sellers in the quarter included Alex Warren, sombr, Cardi B, Ed Sheeran, and Teddy Swims.

Previous wording

The overall increase in Music Publishing revenue was driven by increases in digital, performance, synchronization, and mechanical revenues. Digital revenue increased by $10 million, or 5%, driven by an increase in streaming revenue, which includes a favorable impact of foreign currency exchange rates of $1 million. Revenue from streaming services grew by $10 million, or 5%, to $202 million for the three months ended June 30, 2025 from $192 million for the three months ended June 30, 2024, driven by the impact of digital deal renewals, primarily in the U.S, and a favorable impact of foreign currency exchange rates of $1 million. Performance revenue increased by $6 million, or 12%, driven by growth from concerts, radio and live events primarily in Europe, and a favorable impact of foreign currency exchange rates of $1 million. Mechanical revenue increased by $3 million, or 23%, and includes a favorable impact of foreign currency exchange rates of $1 million. Synchronization revenue increased by $12 million, or 29%, attributable to timing of other copyright infringement settlements, higher television and commercial licensing activity, and the $3 million impact of our acquisition of Tempo.

Current wording

The overall increase in Music Publishing revenue was driven by increases in digital, synchronization, performance, and mechanical revenues. Digital revenue increased by $8 million, or 4%, driven by an increase in streaming revenue. Revenue from streaming services grew by $7 million, or 3%, to $212 million for the three months ended December 31, 2025 from $205 million for the three months ended December 31, 2024, driven by the impact of new deals and renewals and a favorable impact of foreign currency exchange rates of $4 million, partially offset by the $17 million impact of the MLC Historical Matched Royalties in the prior-year quarter. Adjusted for this item, Music Publishing streaming revenue increased $24 million, or 13%, to $212 million for the three months ended December 31, 2025 from $188 million for the three months ended December 31, 2024. Synchronization revenue increased by $21 million, or 54%, attributable to higher television and commercial licensing activity, a $3 million increase in copyright infringement settlements in the quarter, and the $3 million impact of our acquisition of Tempo Music. Performance revenue increased by $8 million, or 14%, driven by growth from concerts, radio and live events, and a favorable impact of foreign currency exchange rates of $2 million. Mechanical revenue increased by $4 million, or 29%, driven by the timing of distributions and includes a favorable impact of foreign currency exchange rates of $1 million.

Previous wording

International revenue increased by $90 million, or 10%, to $968 million for the three months ended June 30, 2025 from $878 million for the three months ended June 30, 2024. Excluding the favorable impact of foreign currency exchange rates of $23 million, International revenue increased by $67 million, or 7%. International Recorded Music revenue increased by $84 million, which includes a favorable impact of foreign currency exchange rates of $21 million, driven by growth across digital, artist services and expanded rights, licensing and physical revenues. International Recorded Music licensing revenue increased by $13 million, or 21%, driven by licensing deals primarily in the U.K. and China, and timing of other copyright infringement settlements. International Recorded Music artist services and expanded-rights revenue increased by $41 million, or 37%, driven by higher concert promotion revenue primarily in France and Spain, and the favorable impact of foreign currency exchange rates of $4 million. International Recorded Music digital revenue increased by $27 million, attributable to higher streaming revenue of $27 million, or 6%, which includes the impact of the BMG Termination, and reflects a favorable impact of foreign currency exchange rates of $9 million. Physical revenue increased by $3 million driven by the favorable impact of foreign currency exchange rates of $4 million, partially offset by the impact of the BMG Termination. International Music Publishing revenue increased by $6 million, or 4%, to $150 million for the three months ended June 30, 2025 from $144 million for the three months ended June 30, 2024. International Music Publishing revenue growth was driven by increases in performance revenue of $6 million due to growth from concerts, radio and live events in Europe and mechanical revenue of $3 million. This was partially offset by decreases in digital revenue of $1 million, synchronization revenue of $1 million, and other revenue of $1 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Current wording

International revenue increased by $112 million, or 12%, to $1,075 million for the three months ended December 31, 2025 from $963 million for the three months ended December 31, 2024. Excluding the favorable impact of foreign currency exchange rates of $51 million, International revenue increased by $61 million, or 6%. International Recorded Music revenue increased by $90 million, which includes a favorable impact of foreign currency exchange rates of $43 million, driven by growth across digital, artist services and expanded rights and licensing revenues, partially offset by a decrease in physical revenue. International Recorded Music digital revenue increased by $67 million, attributable to higher streaming revenue of $70 million, or 14%, which includes the impacts of the DSP True-Up and Settlement Payments in the current and prior-year quarters, and the BMG Termination in the prior-year quarter, and reflects a favorable impact of foreign currency exchange rates of $26 million. International Recorded Music artist services and expanded-rights revenue increased by $35 million, or 24%, driven by higher concert promotion revenue primarily in France, and the favorable impact of foreign currency exchange rates of $9 million. International Recorded Music licensing revenue increased by $4 million, or 5%, primarily driven by favorable movements in foreign currency exchange rates of $3 million. These increases were partially offset by a decrease in physical revenue of $16 million driven by strong releases in Japan and Korea in the prior-year quarter, partially offset by the favorable impact of foreign currency exchange rates of $5 million. International Music Publishing revenue increased by $22 million, or 15%, to $172 million for the three months ended December 31, 2025 from $150 million for the three months ended December 31, 2024. International Music Publishing revenue growth was driven by increases in digital revenue of $18 million due to growth in streaming, performance revenue of $4 million due to growth from concerts and live events primarily in Europe, and mechanical revenue of $2 million driven by the timing of distributions. Synchronization revenue remained constant for the three months ended December 31, 2025 compared to the three months ended December 31, 2024.

Previous wording

Artist and repertoire costs increased by $36 million, to $584 million for the three months ended June 30, 2025 from $548 million for the three months ended June 30, 2024. Artist and repertoire costs as a percentage of revenue remained constant at 35% for each of the three months ended June 30, 2025 and June 30, 2024.

Current wording

Artist and repertoire costs increased by $70 million, to $644 million for the three months ended December 31, 2025 from $574 million for the three months ended December 31, 2024. Artist and repertoire costs as a percentage of revenue increased to 35% for the three months ended December 31, 2025 from 34% for the three months ended December 31, 2024, primarily due to revenue mix.

Previous wording

Product costs increased by $47 million, to $329 million for the three months ended June 30, 2025 from $282 million for the three months ended June 30, 2024. Product costs as a percentage of revenue increased to 19% for the three months ended June 30, 2025 from 18% for the three months ended June 30, 2024 due to revenue and deal mix.

Current wording

Product costs increased by $23 million, to $343 million for the three months ended December 31, 2025 from $320 million for the three months ended December 31, 2024. Product costs as a percentage of revenue remained constant at 19% for each of the three months ended December 31, 2025 and December 31, 2024.

Previous wording

Total selling, general and administrative expense increased by $9 million, to $471 million for the three months ended June 30, 2025 from $462 million for the three months ended June 30, 2024. Expressed as a percentage of revenue, total selling, general and administrative expense decreased to 28% for the three months ended June 30, 2025 from 30% for the three months ended June 30, 2024 due to the factors noted below.

Current wording

Total selling, general and administrative expense decreased by $16 million, to $458 million for the three months ended December 31, 2025 from $474 million for the three months ended December 31, 2024. Expressed as a percentage of revenue, total selling, general and administrative expense decreased to 25% for the three months ended December 31, 2025 from 28% for the three months ended December 31, 2024 due to the factors noted below.

Previous wording

Selling and marketing expense decreased by $6 million, or 3%, to $167 million for the three months ended June 30, 2025 from $173 million for the three months ended June 30, 2024. Expressed as a percentage of revenue, selling and marketing expense decreased to 10% for the three months ended June 30, 2025 from 11% for the three months ended June 30, 2024 due to savings from the 2024 Strategic Restructuring Plan, of which a portion has been reinvested in the Company’s business.

Current wording

Selling and marketing expense decreased by $3 million, or 2%, to $155 million for the three months ended December 31, 2025 from $158 million for the three months ended December 31, 2024. Expressed as a percentage of revenue, selling and marketing expense decreased to 8% for the three months ended December 31, 2025 from 9% for the three months ended December 31, 2024 due to savings from the Company’s restructuring plans, of which a portion has been reinvested in the Company’s business.

Previous wording

Distribution expense decreased by $3 million to $22 million for the three months ended June 30, 2025 from $25 million for the three months ended June 30, 2024. Expressed as a percentage of revenue, distribution expense decreased to 1% for the three months ended June 30, 2025 from 2% for the three months ended June 30, 2024.

Current wording

Distribution expense decreased by $1 million to $31 million for the three months ended December 31, 2025 from $32 million for the three months ended December 31, 2024. Expressed as a percentage of revenue, distribution expense remained constant at 2% for each of the three months ended December 31, 2025 and December 31, 2024.

Previous wording

Adjusted OIBDA increased by $57 million to $373 million for the three months ended June 30, 2025 from $316 million for the three months ended June 30, 2024, driven by the impact of the Copyright Settlement of $9 million in Recorded Music in the current quarter and the $12 million impact of the DSP True-Up Payments in the prior-year quarter, as well as revenue mix, the impact of acquisitions, and savings from the 2024 Strategic Restructuring Plan, partially offset by the reinvestment of these savings in the Company’s business including $7 million of incremental investment in technology for the three months ended June 30, 2025. Expressed as a percentage of total revenue, Adjusted OIBDA margin increased to 22% for the three months ended June 30, 2025 from 20% for the three months ended June 30, 2024.

Current wording

Adjusted OIBDA increased by $100 million to $463 million for the three months ended December 31, 2025 from $363 million for the three months ended December 31, 2024, driven by the impact of the DSP True-Up and Settlement Payments of $7 million in the quarter and $4 million in the prior-year quarter, and the MLC Historical Matched Royalties of $4 million in the prior-year quarter, as well as revenue mix, savings from the Company’s restructuring plans, a portion of which has been reinvested in the Company’s business, and favorable movements in currency exchange rates of approximately $25 million compared to the prior-year quarter. Expressed as a percentage of total revenue, Adjusted OIBDA margin increased to 25% for the three months ended December 31, 2025 from 22% for the three months ended December 31, 2024.

Previous wording

Our non-cash stock-based compensation and other related costs increased by $5 million to $16 million for the three months ended June 30, 2025 from $11 million for the three months ended June 30, 2024, primarily due to $5 million of costs related to the departure of our former CFO in the current year.

Current wording

Our non-cash stock-based compensation and other related costs increased by $1 million to $20 million for the three months ended December 31, 2025 from $19 million for the three months ended December 31, 2024.

Previous wording

There was no net gain on divestitures during the three months ended June 30, 2025. Net gain on divestitures during the three months ended June 30, 2024 includes a pre-tax gain of $1 million in connection with the divestiture of certain non-core owned and operated media properties.

Current wording

Net loss on divestitures during the three months ended December 31, 2025 includes a pre-tax loss of $5 million in connection with the divestiture of certain assets. There was no net loss on divestitures during the three months ended December 31, 2024.

Previous wording

Our transformation initiative costs which include costs associated with our finance transformation increased by $1 million to $19 million for the three months ended June 30, 2025 from $18 million for the three months ended June 30, 2024.

Current wording

Our transformation initiative costs, which include costs associated with our finance transformation, remained constant at $17 million for each of the three months ended December 31, 2025 and December 31, 2024.

Previous wording

Our restructuring and impairment charges increased to $69 million for the three months ended June 30, 2025 from $1 million for the three months ended June 30, 2024. The three months ended June 30, 2025 includes an impairment charge of $70 million for long-lived assets associated with certain of the Company’s non-core e-tailer operations.

Current wording

Our restructuring and impairment charges increased to $34 million for the three months ended December 31, 2025 from $27 million for the three months ended December 31, 2024. The three months ended December 31, 2025 includes an impairment charge of

Previous wording

Our depreciation expense increased by $4 million to $29 million for the three months ended June 30, 2025 from $25 million for the three months ended June 30, 2024. The increase is primarily driven by the core financials component of our new technology platform being placed into service.

Current wording

Our depreciation expense increased by $2 million to $31 million for the three months ended December 31, 2025 from $29 million for the three months ended December 31, 2024. The increase is primarily driven by the core financials and global revenue solution components of our new technology platform being placed into service.

Previous wording

Our amortization expense increased by $12 million, to $67 million for the three months ended June 30, 2025 from $55 million for the three months ended June 30, 2024. The increase is driven by incremental amortization related to acquisitions of music-related assets, partially offset by certain intangible assets becoming fully amortized.

Current wording

Our amortization expense increased by $11 million, to $68 million for the three months ended December 31, 2025 from $57 million for the three months ended December 31, 2024. The increase is driven by incremental amortization related to acquisitions of music-related assets, partially offset by EMP intangible assets, which have been classified as held for sale.

Previous wording

Our operating income decreased by $38 million to $169 million for the three months ended June 30, 2025 from $207 million for the three months ended June 30, 2024. In addition to the factors impacting Adjusted OIBDA described above, the decrease in operating income was driven by an increase in restructuring and impairment charges of $68 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, higher amortization expenses of $12 million, higher non-cash stock-based compensation and other related costs of $5 million, and the impact of a $1 million net gain on a divestiture in the prior-year quarter.

Current wording

Our operating income increased by $74 million to $288 million for the three months ended December 31, 2025 from $214 million for the three months ended December 31, 2024, primarily due to the factors impacting Adjusted OIBDA described above. The increase in operating income was partially offset by higher amortization expenses of $11 million, an increase in restructuring and impairment charges of $7 million, and the impact of a $5 million net loss on divestitures for the three months ended December 31, 2025 compared to the three months ended December 31, 2024.

Previous wording

Our interest expense, net, increased to $43 million for the three months ended June 30, 2025 from $40 million for the three months ended June 30, 2024 due to incremental debt related to the Tempo Asset-Based Notes acquired in connection with the acquisition of Tempo.

Current wording

Our interest expense, net, increased to $45 million for the three months ended December 31, 2025 from $37 million for the three months ended December 31, 2024 due to incremental debt related to the Tempo Asset-Based Notes acquired in connection with the acquisition of Tempo Music in the prior year, partially offset by lower interest rates on variable rate debt in the quarter.

Previous wording

Other expense for the three months ended June 30, 2025 primarily includes foreign currency losses on our Euro-denominated debt of $70 million, currency exchange losses on our intercompany loans of $63 million, and realized and unrealized losses on hedging activity of $8 million. This compares to foreign currency gains on our Euro-denominated debt of $7 million, currency exchange losses on our intercompany loans of $5 million, and realized and unrealized gains on hedging activity of $1 million for the three months ended June 30, 2024.

Current wording

Other income for the three months ended December 31, 2025 primarily includes income earned on equity method investments of $2 million and a currency exchange gain on our intercompany loans of $1 million, partially offset by a foreign currency loss on our Euro-denominated debt of $1 million, and a realized and unrealized loss on hedging activity of $1 million. This compares to foreign currency gains on our Euro-denominated debt of $61 million, currency exchange gains on our intercompany loans of $46 million, and realized and unrealized gains on hedging activity of $15 million for the three months ended December 31, 2024.

Previous wording

Our income tax expense decreased by $25 million to $5 million for the three months ended June 30, 2025 from $30 million for the three months ended June 30, 2024. The decrease of $25 million in income tax expense is primarily due to the impact of pre-tax loss in the current period and benefit for updated allowable costs for reported foreign derived intangible income in the prior period.

Current wording

Our income tax expense decreased by $18 million to $71 million for the three months ended December 31, 2025 from $89 million for the three months ended December 31, 2024. The decrease of $18 million in income tax expense is primarily due to a decrease in pre-tax income in the quarter.

Previous wording

Net income decreased by $169 million to $261 million for the nine months ended June 30, 2025 from $430 million for the nine months ended June 30, 2024 as a result of the factors described above.

Current wording

Net income decreased by $66 million to $175 million for the three months ended December 31, 2025 from $241 million for the three months ended December 31, 2024 as a result of the factors described above.

Previous wording

Recorded Music cost of revenues increased by $70 million, to $706 million for the three months ended June 30, 2025 from $636 million for the three months ended June 30, 2024. Expressed as a percentage of Recorded Music revenue, Recorded Music artist and repertoire costs remained constant at 28% for each of the three months ended June 30, 2025 and June 30, 2024. Expressed as a percentage of Recorded Music revenue, Recorded Music product costs increased to 24% for the three months ended June 30, 2025 from 23% for the three months ended June 30, 2024, driven by revenue and deal mix.

Current wording

Recorded Music cost of revenues increased by $74 million, to $760 million for the three months ended December 31, 2025 from $686 million for the three months ended December 31, 2024. Expressed as a percentage of Recorded Music revenue, Recorded Music artist and repertoire costs increased to 28% for the three months ended December 31, 2025 from 27% for the three months ended December 31, 2024 primarily due to revenue mix. Expressed as a percentage of Recorded Music revenue, Recorded Music product costs decreased to 23% for the three months ended December 31, 2025 from 24% for the three months ended December 31, 2024, driven by revenue and deal mix.

Previous wording

Recorded Music selling, general and administrative expense decreased by $8 million, to $345 million for the three months ended June 30, 2025 from $353 million for the three months ended June 30, 2024. The increase in general and administrative expense was largely driven by the impact of acquisitions of $4 million, partially offset by lower non-cash stock-based compensation and other related costs of $2 million. The decrease in selling and marketing expense was driven by savings from the 2024 Strategic Restructuring Plan, a portion of which has been reinvested into the Company’s business. The decrease in distribution expense was primarily driven by revenue mix. Expressed as a percentage of Recorded Music revenue, Recorded Music selling, general and administrative expense decreased to 25% for the three months ended June 30, 2025 from 28% for the three months ended June 30, 2024.

Current wording

Recorded Music selling, general and administrative expense decreased by $28 million, to $335 million for the three months ended December 31, 2025 from $363 million for the three months ended December 31, 2024. The decrease in general and administrative expense was largely driven by cost savings from the Company’s restructuring plans, a portion of which has been reinvested into the Company’s business. The decrease in selling and marketing expense was also driven by savings from the Company’s restructuring plans, as well as lower variable marketing spend. The decrease in distribution expense was primarily driven by revenue mix. Expressed as a percentage of Recorded Music revenue, Recorded Music selling, general and administrative expense decreased to 23% for the three months ended December 31, 2025 from 27% for the three months ended December 31, 2024.

Previous wording

Recorded Music operating income decreased by $29 million to $201 million for the three months ended June 30, 2025 from $230 million for the three months ended June 30, 2024. In addition to the factors impacting Adjusted OIBDA described below, the decrease in operating income was driven by an increase in restructuring and impairment charges of $67 million compared to the prior-year quarter, which includes an impairment charge of $70 million for long-lived assets associated with certain of the Company’s non-core e-tailer operations, and higher amortization expenses of $3 million related to acquisitions of music-related assets.

Current wording

Recorded Music operating income increased by $91 million to $329 million for the three months ended December 31, 2025 from $238 million for the three months ended December 31, 2024. In addition to the factors impacting Adjusted OIBDA described below, the increase in operating income was driven by decreases in restructuring and impairment charges of $6 million and depreciation expense of $3 million compared to the prior-year quarter, partially offset by higher amortization expenses of $4 million related to acquisitions of music-related assets.

Previous wording

Recorded Music Adjusted OIBDA increased by $40 million to $321 million for the three months ended June 30, 2025 from $281 million for the three months ended June 30, 2024, largely driven by the impact of the Copyright Settlement of $9 million in the current quarter and the $12 million impact of the DSP True-Up Payments in the prior-year quarter, as well as savings from the 2024 Strategic Restructuring Plan, of which a portion has been reinvested in the Company’s business, and favorable movements in foreign currency exchange rates. Expressed as a percentage of Recorded Music revenue, Recorded Music Adjusted OIBDA margin increased to 24% for the three months ended June 30, 2025 from 22% for the three months ended June 30, 2024 due to the factors noted above.

Current wording

Recorded Music Adjusted OIBDA increased by $80 million to $403 million for the three months ended December 31, 2025 from $323 million for the three months ended December 31, 2024, largely driven by the impact of the DSP True-Up and Settlement Payments of $7 million in the quarter and $4 million in the prior-year quarter, as well as savings from the Company’s restructuring plans, of which a portion has been reinvested in the Company’s business, and favorable movements in foreign currency exchange rates of approximately $18 million. Expressed as a percentage of Recorded Music revenue, Recorded Music Adjusted OIBDA margin increased to 27% for the three months ended December 31, 2025 from 24% for the three months ended December 31, 2024 due to the factors noted above.

Previous wording

The overall increase in Music Publishing revenue was driven by growth in digital, performance, synchronization and mechanical revenues, as described in the “Total Revenues” and “Revenue by Geographical Location” sections above.

Current wording

The overall increase in Music Publishing revenue was driven by growth in digital, synchronization, performance, and mechanical revenues, as described in the “Total Revenues” and “Revenue by Geographical Location” sections above.

Previous wording

Music Publishing cost of revenues increased by $30 million, or 5%, to $612 million for the nine months ended June 30, 2025 from $582 million for the nine months ended June 30, 2024. Expressed as a percentage of Music Publishing revenue, Music Publishing cost of revenues decreased to 63% for the nine months ended June 30, 2025 from 64% for the nine months ended June 30, 2024.

Current wording

Music Publishing cost of revenues increased by $18 million, or 9%, to $228 million for the three months ended December 31, 2025 from $210 million for the three months ended December 31, 2024. Expressed as a percentage of Music Publishing revenue, Music Publishing cost of revenues decreased to 63% for the three months ended December 31, 2025 from 65% for the three months ended December 31, 2024, largely due to revenue mix.

Previous wording

(1)Includes depreciation expense of $1 million for the three months ended June 30, 2025. There was no depreciation expense for the three months ended June 30, 2024.

Current wording

(1)Includes depreciation expense of $1 million for each of the three months ended December 31, 2025 and December 31, 2024.