Warner Music Group’s fourth quarter was marked by strong revenue and profit growth, with management attributing performance to increased streaming market share, successful new releases, and a revamped approach to catalog monetization. CEO Robert Kyncl underscored that the company’s “steady market share improvement” stemmed from both new hits and creative promotion of its extensive catalog, including high-profile sync placements. Leadership emphasized that investments in technology and operational efficiencies, such as overhauling its supply chain and financial systems, also played a central role in margin expansion and cash flow generation.
Is now the time to buy WMG? Find out in our full research report (it’s free for active Edge members).
Warner Music Group (WMG) Q4 CY2025 Highlights:
- Revenue: $1.84 billion vs analyst estimates of $1.77 billion (10.4% year-on-year growth, 4.1% beat)
- Adjusted EPS: $0.43 vs analyst estimates of $0.40 (6.9% beat)
- Adjusted EBITDA: $463 million vs analyst estimates of $407.6 million (25.2% margin, 13.6% beat)
- Operating Margin: 15.7%, up from 12.8% in the same quarter last year
- Market Capitalization: $15.56 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Warner Music Group’s Q4 Earnings Call
- Michael Morris (Guggenheim) asked for details on the structure and financial impact of new AI licensing deals. CEO Robert Kyncl explained the focus on flexible, consumption-based models, while CFO Armin Zerza reiterated expectations for material revenue contributions starting next year.
- Peter Supino (Wolfe Research) pressed for specifics on paid streaming growth and incremental growth drivers. Zerza highlighted the shift toward value-led streaming revenue, pipeline M&A, and the potential for AI to create new premium tiers.
- Ian Moore (Bernstein) inquired about the sustainability of recent market share gains. Kyncl described broad-based growth across business units, attributing success to prior restructuring, capital allocation discipline, and artist development.
- Cameron Mansson-Perrone (Morgan Stanley) asked about integration of AI tools with traditional streaming partners and the impact of recent price changes at major DSPs. Kyncl confirmed ongoing discussions for premium AI-enabled tiers and noted benefits from improved price certainty in recent deals.
- Kutgun Maral (Evercore ISI) requested a bridge to longer-term margin targets and the rationale for cash flow conversion guidance. Zerza identified cost savings, high-margin streaming, and AI-driven revenue as key to margin expansion, while maintaining flexibility for reinvestment.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will focus on (1) tracking the rollout and financial contribution of Warner Music Group’s AI licensing partnerships, (2) monitoring the pace and quality of new catalog acquisitions via its expanded Bain joint venture, and (3) evaluating the success of premium streaming and direct-to-consumer initiatives. The impact of ongoing DSP price and tier changes on revenue mix will also be an important area of attention.
Warner Music Group currently trades at $29.78, up from $28.19 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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