Q1 2024 Warner Music Group Corp Earnings Call
Operator: Now, I would like to turn today's call over to your host, Mr. Kareem Chin, head of investor relations. You may begin. Good morning, everyone, and welcome to Warner Music Group's fiscal first quarter earnings call. Please note that our earnings reports will be an expanding snapshot in the form of 10-2 or on our website. On today's call, we have our CEO Robert Kinsel, and our CFO Brian Castellani, who will take you through our results, and then we'll answer your questions. For all prepared remarks, I'd like to refer you to the second slide of the earliest snapshots from last year. This communication includes forward-looking statements that reflect the current views of Warner Music Group about future events and finances. We plan to present 39 gap results during this conference, and General Hughes-Pasha.
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Kareem Chin: That provided schedules, records, audio, and music notes to our draft results in our early press release. All of these materials are posted on our website. Also, please note that all revenue figures and comparisons discussed today will be presented in constant currency unless otherwise necessary. All forward-looking statements are made as of today, and we disclaim any duty to update such statements. Our expectations, beliefs, and projections are expressed in good faith, and we believe there is a reasonable basis for all of this. However, there will be no assurance that management's expectations, beliefs, and projections will result or be achieved.
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Kareem Chin: Investors should not rely on forward-looking statements because they are subject to a variety of risks, uncertainties, and other factors that can cause actual results that differ materially from our expectations. Information-conferring factors that could cause actual results to differ materially from those in the form of their statements are contained in our filings with the SEC. With that, I'll turn it over to Robert. Thank you, Kareem. Good morning, everyone.
Speaker Change: Welcome to Warner Music group's first quarter earnings call for the period ended December 31, 2023 at the request of Warner Music Group today's call is being recorded for replay purposes, and if you object. You may disconnect at any time now I would like to turn today's call over to your host.
Mr. Kareem Chin head of Investor Relations you may begin.
Robert Kinsel: Thank you for joining us today. We're moving at velocity to seek and grow the opportunities that exist in the music industry today and we see in the future. I'll talk about how the industry is transforming, unique opportunities here at WMG, and Howard Langman around work to propel our growth for the next decade. But first, I'll start with our Q1 results.
Kareem Chin: Good morning, everyone and welcome to Warner Music group's fiscal first quarter earnings Conference call.
Kareem Chin: Please note that our earnings press release, earning snapshot in the Form 10-Q are on our website.
For our prepared remarks, I'd like to refer you to the second slide the earning snapshot to remind you <unk>.
Robert Kinsel: My references to year-over-year growth rates will be in the top and current section of this video, and References to Normalized Revenue and Adjusted Oil Costs, or Adjusted Items that Impact Comparatively, will be included in our filings, and Brian will provide commentary as well. I'm happy to report that the momentum we saw in the second half of 2023 has not only continued but accelerated into Q1, with both our recorded music and music publishing segments generating record-high quarterly revenue. Total revenue increased 16% and, on a normalized basis, 11%.
This communication includes forward looking statements that reflect current views with Warner music group about future events and financial performance.
Kareem Chin: We plan to present certain non-GAAP results. During this conference call and in our earnings snapshot slides, we have provided schedules reconciling these results to our GAAP results in our earnings press release all of these materials are posted on our website.
Also please note that all revenue figures and comparisons discussed today will be presented in constant currency unless otherwise noted.
All forward looking statements are made as of today and we disclaim any duty to update such statements.
Kareem Chin: Our expectations beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them.
Robert Kinsel: Recording music revenue accelerated to 15%; on a normalized basis, revenue grew 9%, streaming grew 11%, and subscription streaming increased 12%. These results reflect solid new release and catalogue performance, which were supported by DSB Play. Music Publishing continues to deliver impressive results, with revenue growth of 20%, driven by streaming growth of 30%. Total adjusted oil dumps increased 33% or 10% on a normalized scale.
Kareem Chin: However, there can be no assurance that management's expectations beliefs, and projections will result or be achieved.
Investors should not rely on forward looking statements because they are subject to a variety of risks uncertainties and other factors that can cause actual results to differ materially from our expectations.
Formation concerning factors that could cause actual results to differ materially from those in the forward looking statements is contained in our filings with the SEC and with that I'll turn it over to Robert.
Robert: Thank you Terry and good morning, everyone. Thank you for joining us today.
We're moving at velocity see the growth opportunities that exist in the music industry today.
Robert Kinsel: I am thrilled with the momentum we're building with recorded music, driven by our ability to deliver great hits across multiple labels and geographies. Recent Artist Successes Endorsement and Plastics Jack Harlow, who topped Billboard's Hot 100 with his single Loving the Mood. Warner Records and Young Race, who climbed to number one in the UK. Cher, whose album Christmas debuted at number one on the Billboard Top Holiday Album Chart
And we've seen in the future.
I will talk about how the industry is transforming the unique opportunities here at W. Unchanged.
And how we're laying the groundwork propel our growth for the next decade.
But first I'll start with Q1 results.
My references to year over year growth rates will be in constant currency and references to normalized revenue and adjusted OIBDA.
Robert Kinsel: Mike Towers, whose recent album went number one on Spotify's Top Albums Debute for both Global and USA Charts, and Korean Group 5050, who had the biggest hit of the year on TikTok with Cupid, and King, who had the most trained track of 2023 in India. We are firing on all cylinders across many territories around the globe. We have number-one hits by C. Gambino in Sweden, Bennett in Denmark, Big Sushien in the Czech Republic, Syra in Germany, and Smolassie and Doda in Poland, just to name a few. And Music Publishing, our strong performance and momentum. This comparison is a border of accelerating neuromuscular growth. Warner Chappell was named No.
Adjusted for items that impact comparability.
Robert: The details of these can be found in our filings and Brian will provide commentary as well.
Robert: I'm happy to report that the momentum we saw in the second half of 2023 has not only continued but accelerated into Q1 with both our recorded music and music publishing segments generating record high quarterly revenue.
Total revenue increased 16% and on a normalized basis, 11%.
Robert: Recorded music revenue accelerated to 15% and on a normalized.
Normalized basis revenue grew 9% streaming grew 11% and subscription screaming increased 12%.
These results reflect solid new release and catalog performance, which were supported by DSP price increases.
Robert Kinsel: 1 Hot 100 Publisher on Billboard Year-End Charts, with his songwriters landing No. 1 on the Hot 100 Hot R&B and Hip-Hop Songs and Hot Country Song Charts the next few years. Our fundraisers contributed to massive funds, including I Remember Everything by Zach Bryan and Kacey Musgraves and Miley Cyrus' Flowers, which both won Grammys, and 1st Person Shooter by Drake featuring J. Cole. We're always expanding our publishing roster. Earlier this week, we signed a deal with country super star Morgan Whelan.
Yes, I think publishing continued to deliver impressive results with revenue growth of 20% driven by streaming growth of 30%.
Total adjusted OIBDA increased 33% or 10% on a normalized basis.
I am thrilled with the momentum we're building with recorded music driven by our ability to deliver great heads across multiple labels and geographies.
Recent artist success within the Ointments, England.
Robert: <unk>, Jack Harlow Billboards top 100 single loving on me.
Robert Kinsel: We recently signed deals with Kenya Graves and with Swedish band Bolliger. Both are Warner Music Recording Artists. We have also entered into an agreement with Gabito Ballesteros, one of the most in-demand Mexican music stars, and with both the most streamed artist in the Netherlands in 2023 for Spotify Rant. We are in a very unique asset class of our own. The short form nature of music means it's well aligned with today's discovery and consumption trends, which are driven by the algorithms of the watch platform and use sharing playlists with each other. Music has the highest repeat consumption of any medium. Music is evergreen. You'll still want to go back to your favorite song 30, 40 years later.
Robert: Warner Records, Kenya, Grace and climbed to number one in the UK.
Mike.
Robert: Recent album went to number one on spot advised top albums debuted for both global and USA charts.
Robert: The Korean Fintech type thing.
With the biggest of the year on fixed dock with Cupid.
Robert: And King.
Robert: Most train track of 2023 and India.
We are firing on all cylinders across many territories around the globe.
Robert: We have number one hence by <unk> in Sweden.
Robert: In Denmark, Victor Shannon, Czech Republic, Sierra in Germany, and small SDN data in Poland just to name a few.
Robert Kinsel: And music is easy for fans to create. Users of the world's largest social media platforms love using music to soundtrack their own content, causing an increase in the reach, virality, and popularity of our channels. And as the music business has grown larger, faster, noisier, and more complex, with Markathon Distribution creating a global platform, the role of large music companies is growing exponentially more relevant. It is harder than ever for any one artist to break through the clutter.
Robert: In music publishing our strong performance and momentum continued with the fifth consecutive quarter of accelerating year on year growth.
Robert: Warner Chappell was named number one hot 100 publisher on Billboard yearend charts, but it's songwriters lending number ones on the Hot 100 Hot RMB in the hip hop songs and half country songs charts to name a few.
Robert: Our song writers contributed to massive songs, including I remember everything by Zach Brian Casey Musgrave's.
Robert Kinsel: And that's where we come in. We collect and process large volumes of data and make it usable and actionable, driving repeatable results. A task that is very difficult for an individual artist or a small business because of the resources and skill sets it requires. Our global marketing footprint and expertise, combined with deep technical capabilities to build systems and data insights, enable us to differentiate ourselves in this regard. In fact, looking at the last quarter, songs from the major music label groups represented 94% of songs on the Billboard Hot 100.
Robert: And Miley Cyrus is flowers, which both won Grammys and first person shooter by Drake featuring J Cole.
Robert: We're always expanding our publishing roster earlier this week, we signed a deal with country Superstar Morgan Wayland.
Robert: We recently signed deals with <unk> and with Swedish band Bullshit.
Robert: Warner Music recording artists.
Robert: We also entered into agreements with capital bias tariffs one of the most in demand Mexican music stars and with both the most streamed artist in Netherlands in 2023 for Spotify Rep.
Robert: We are in a very unique asset class of our own.
Robert Kinsel: Additionally, our ability to aggregate large volumes of rights across recorded music and publishing... provides individual artists and songwriters with more collective bargaining power when dealing with existing and new distributors and technology. This will be even more crucial in the age of AI, because everyone wants the most popular music of today and an iconic catalog. W&G is a thriving company in a unique and growing industry. We're in a position of strength at a pivotal moment for music. And that's the smart time to change, innovate, and lead. Yesterday, we announced a plan to free up more funds to invest in music and accelerate our growth for the next decade. To do that, we have to make thoughtful choices about where we put our people, resources, and capital. We will realize approximately $200 million in annualized cost savings by the end of September 2025, the majority of which will be relisted in all recorded music and publishing. Our plan includes the reduction of our workforce by 600 employees over a 10% increase.
Robert: The shortfall nature of music means it's well aligned with the data discovery and consumption trends, which are driven by the algorithms of the large platforms and to use the sharing platelets with each other.
Robert: Music is the highest repeat consumption any medium.
Robert: Music is evergreen Youll still wanted to go back to your favorite songs 30 40 years later.
Robert: And music is easy for fans to create with <unk>.
Robert: Users of the world's largest social media platforms love using music to subtract our own content further increasing the reach virality and popularity of our catalog.
Robert: And as the music business has grown larger faster noisier and more complex with the market size distribution, creating a flood of content on platforms. The ROE of large music companies is growing exponentially more relevant.
Robert: It's harder than ever for anyone audits to break through the clutter.
Speaker Change: And that's where we come in.
Robert: We collect and process large volumes of data and make it usable and actionable driving repeatable results a task that is very difficult for any individual artist or a small business because of the resources and skill sets and requires.
Robert Kinsel: Most of which will relate to our owned and operated media properties, as well as corporate and various support functions. Yesterday, we began examining these media properties, as well as our in-house ad sales functions, as they operate outside our core responsibilities to our roster. We are in an exclusive process for the potential sale of the news and entertainment websites to the FBI, with more to say on that. After a thorough exploration of alternatives, we have decided to wind down the podcasting grant interval for events and the social media publisher IMG.
Robert: Our global marketing footprint and expertise combined with deep technical capabilities to build systems and data insights enable us to differentiate ourselves in this regard.
Robert: In fact looking at the last quarter songs from the major music label groups represented 94% of the songs on Billboard half 100.
Robert: Additionally, our ability to aggregate large volumes of rights across recorded music publishing provides individual artists and songwriters with more collective bargaining power when dealing with complex existing and new distributors and technologies.
Robert Kinsel: Brian will provide more details on the funding and implications of the plan, but I'd like to tell you a little bit more about it and how we'll be using these cost savings to deliver on our three strategic priorities, which are to grow engagement with music, increase the value of music, and evolve how we work together. To grow engagement with music, we're signing and developing the most talented artists and songwriters, sharpening our focus on high-growth geographies and vibrant genres, and using our data and insights to help original talents stand out. For example, look at the great artists that opened Texas Stories like Dua Lipa, Jack Harlow, and That Guy.
Robert: This will be even more crucial in the age of AI because everyone wants the most popular music of today.
Robert: And in Iconix catalog.
Robert: <unk> is a thriving company and our unique and growing industry.
Robert: We're in a position of strength at a pivotal moment in the music business.
Robert: The smart time to change innovate and lead.
Robert: Yesterday, we announced the plan to free up more funds to invest in music and accelerate our growth for the next decade.
Robert: To do that we have to make thoughtful choices about where we put our people resources and capital.
Robert Kinsel: We're also taking a more holistic approach to the management of our deep and shallow catalog. We're doing the detailed work of priming our entire catalog so it achieves maximum impact on the PSA. At the same time, we're identifying select albums for targeted campaigns, similar to those we run by Frontline Repertoire. Recent examples of successful catalog projects include the 30th anniversary of Green Day's Duking and the 40th anniversary of Darking Has Stopped Making Sense, which drove a 33% jump in annual revenue across the band's entire catalog. We are expanding our distribution and administration by building scaled and effective infrastructure to efficiently cater to larger and You've heard me say many times that music remains significantly undervalued, especially when compared to video. The most recent step in the right direction came from Spotify.
Robert: We will realize approximately $200 million.
Robert: Annualized cost savings by the end of September 2025, the majority of which will be reinvested into our recorded music publishing businesses.
Robert: Our plan includes a reduction of our workforce by 600 employees or roughly 10%.
Robert: Most of which will relate to our owned and operated media properties as well as corporate them various support functions.
Robert: Yesterday, we began exiting these media properties as well as our in house AD sales function as they operate outside our core responsibilities to our roster.
Robert: Why nonexclusive process for the potential sale of the news Entertainment website, Approx RPX with more to say on that soon.
Robert: After a thorough exploration of alternatives, we have decided to wind down the path casting brown integral present, and a social media publisher IMG yen.
Robert: Brian will provide more details on the financial implications of the plant.
Robert Kinsel: We're pleased they're introducing a new royalty model that better aligns economics with the quality content that drives engagement. We view this as just the beginning, and we're continually engaged with our partners to drive faster growth. And another lever to increase the value of music is by strengthening our artists' direct relationships with their superpets. We'll accelerate the building of our new products and experiences, as it's an area that's relatively compact and under-monitored. Everything we do is in service to our artists and songwriters. In today's global economy, where scale and speed matter, shared services are often the best way to pool our resources and promote best practices. We already made moves in this direction by centralizing our technology, finance, and business development teams last year.
Brian: But I'd like to tell you a little bit more about it and how we'll be using these cost savings to deliver on our three strategic priorities, which are to grow engagement with music to increase the value of music and evolve how we've worked together.
Robert: To grow engagement with music, we're signing of developing the most talented artists and songwriters sharpening our focus on high growth geographies and vibrant genres, and using our data and insights to the.
Robert: Original talent standout.
Robert: Look at the great audits, the orphan success stories like do Alibaba, Jack Harlow and back Brian.
Robert: We're also taking a more holistic approach to the management of our deep and shallow catalog. We're doing the detailed work of priming our entire catalog. So we'd achieved maximum impact on the DSP.
Robert: At the same time, we are identifying select albums for targeted campaigns similar to those we run by frontline repertoire.
Robert Kinsel: At the same time, in a creative industry like ours, instincts, relationships, and subject matter expertise can make all the difference. So we're working hard to find the right balance so that we'll become more efficient, increase operating leverage, and free up more funds to invest in music and tech, which, in turn, will drive further sustainable growth. As a whole, we're positioning ourselves to be first, to be different, and to be exceptional.
Robert: Examples of successful catalog projects include 30th anniversary of Green days, do King and the 40th anniversary of talking had stopped making sense.
Robert: Which drove 33% jump in annual revenue across the banks entire catalog.
Robert: We're expanding our distribution and administration by building scale and effective infrastructure to efficiently cater to a larger and larger volumes of aspiring artists and songwriters.
Robert Kinsel: We look forward to keeping you updated as we make progress. Our amazing roster of artists and songwriters, combined with our strategy to stay several steps ahead of our fast-evolving industry, will enable us to thrive. Q2 is already off to a strong start, and it was great to celebrate all of our wins at the Grammys this past year. Fresh off of signing a new deal with Megan Thee Stallion, she skyrocketed to number one on the Billboard Hot 100. This week we have 5 of the top 10 artists on the chart, including Jack Harlow, Teddy Swims, Jack Ryan, and Benson.
Robert: You've heard me say many times that music remain significantly undervalued.
Robert: Especially when compared to video.
Robert: The most recent step in the right direction and from Spotify.
Robert: We're pleased they're introducing a new royalty model, which better aligns the economics with the quality content that drives engagement.
Robert: We view this as just the beginning and we're continually engaged with our partners to drive faster growth.
Robert: Another lever to increase the value of music is by strengthening our artist direct relationships with their super pads.
Robert: We will accelerate the building of our new products and experiences as it is an area that's relatively untapped and under monetized.
Robert: Everything we do is in service of our artists and songwriters and we're evolving our company is structured in order to maximize our impact on their behalf.
Robert Kinsel: We also have some massive new artists dropping later this year, including releases from Cardi B, Coldplay, Sia, Charli XCX, Gianna, and Ben Thede. We're incredibly optimistic about the future of the music industry in general and the Warner Music Group in particular. With a refreshed leadership team that is gelling incredibly well and our significantly upgraded text capabilities that are starting to drive results, we're laying the building blocks for future success. The music ecosystem is evolving and growing, and we're excited about the industry's continued progress and realizing true value. Now, here's Brian to walk you through our final showreel. Thank you, Robert, and good morning, everyone.
Robert: In today's global economy, where scale and speed matter shared services are often the best way to pool, our resources and foremost best practices.
Robert: We made moves in this direction by centralizing, our technology finance and business development teams last year.
Robert: At the same time, and our creative industrial like ours.
Robert: <unk> relationships and subject matter expertise can make all the difference. So we're working hard to find the right balance so that will become more efficient increased operating leverage and free up more funds to invest in music amtech, which in turn will drive further sustainable growth.
Speaker Change: That's helpful.
Robert: Positioning ourselves to be first to be different and to be exceptional.
Robert: We look forward to keeping you updated as we make progress.
Robert: Our amazing roster of artists and songwriters combined with our strategy to states. Several steps ahead of our fast evolving industry will enable us to thrive.
Brian: In Q1, we've returned to healthy double-digit growth on a reported and normalized basis, that was underpinned by strength across both recorded music and music publishing. Before I get into details, I want to remind everyone that our references to normalize will adjust for items that impact year-over-year comparability. Previously disclosed items affecting comparability include the DMG Digital Revenue Roll-Off, which was $13 million, unfavorable in this order, and a cataloged white... $70 million. There was a renewal with one of our international digital partners that resulted in upfront incremental revenue of $27 million in the quarter. This favorably impacted recorded music's slinging revenue. The adjusted order associated with this renewal was approximately $10 million.
Robert: Q2 is already off to a strong start and it was great to celebrate all of our wins with the grammies This past weekend.
Robert: Fresh off of signing a new deal with Meghan <unk> Chief skyrocketed to number one on the Billboard Hot 100.
Robert: This week, we have five of the top 10 artists on the chart, including Chegg Harlow that east winds, Zach Bryan and Ben some boon.
Robert: We also have some massive audits dropping later this year, including releases from Cardi, B, Coldplay, CEO, Charlie CX, Ghana, and Ben Swinburne.
Speaker Change: We're incredibly optimistic about the future of the music industry in general and the Warner Music group in particular.
Speaker Change: With a refreshed leadership team that is gelling incredibly well and our significantly upgraded capabilities that are starting to drive results.
Robert: Laying the building blocks for future success.
Brian: The details relating to these items can be found in our earnings spreadsheet. In Q1, total revenue grew 16% and adjusted overhead increased 33% with a margin of 25.8%, an increase of 330 basis points over the prior year quarter. On a normalized bass note, revenue grew 11.5%, and it just literally increased 10% with a margin of 22.6%, which was in line with the prior year quarter. Recorded music revenue grew 15% and 9% on a normalized basis. And there's some evidence of it.
Robert: The music ecosystem is healthy and growing and we're excited about the industry's continued progress in realizing the true value of music.
Robert: Now here's Brian to walk you through our financial results.
Brian: Thank you Robert and good morning, everyone.
Brian: In Q1, we returned to healthy double digit growth on a reported and normalized basis.
Brian: Was underpinned by strength across both recorded music and music publishing.
Brian: Before I get into the details I want to remind everyone that our references to normalize we will adjust for items that impacted year over year comparability.
Brian: The previously disclosed items affecting comparability include the BMG digital revenue roll off.
Brian: Streaming revenue increased 11.4% on a normalized basis, an improvement from the 9% we reported last quarter. Subscription streaming revenue grew 14%, or 12% on a normalized basis. Supported by PNP Price and Supporter Property by 10%, reflecting sequential improvements from traditional formats as well as the impact of the TikTok renewal, which went into effect last quarter. Physical revenue increased 13%, driven by strong releases in the U.S., Japan, and the U.K., including releases from Prince, D.O.C.A. Hero and Cher.
Brian: Was $13 million unfavorable in the quarter.
Brian: And a catalog licensing agreement extension, which had a favorable impact to recorded music licensing revenue and adjusted OIBDA of $68 million and $67 million respectively.
Brian: In addition.
Brian: There was a renewal with one of our international digital partners that resulted in upfront incremental revenue recognition of $27 million in the quarter.
Brian: This favorably impacted recorded music streaming revenue.
Brian: Adjusted OIBDA associated with this renewal was approximately $10 million.
Brian: The details relating to these items can be found in our earnings press release.
Brian: Under Services, expanded rights revenue decreased 4% due to lower merchandising revenue, partially offset by higher concert promotion revenue in France and Japan. Licensing revenue grew by 81%, primarily due to the aforementioned catalog licensing agreement extension, as well as the timing of new licensing deals, primarily in the U.S. Recorded music is up just a little bit, at an increase of 36% with a margin of 28.5%, an increase of 440 spaces. On a normalized basis...
Brian: In Q1 total revenue grew 16% and adjusted OIBDA increased 33% with a margin of 25, 8% an increase of 330 basis points over the prior year quarter.
Brian: On a normalized basis.
Brian: Revenue grew 11% and <unk>.
Brian: Adjusted OIBDA increased 10% with a margin of 22, 6%, which was in line with the prior year quarter.
Brian: Recorded music revenue grew 15% and 9% on a normalized basis.
Brian: The adjusted oil is going to increase by 11% with a margin of 24.8%, an increase of 50 basis points. Music publishing continues to deliver strong results, with revenue growth of 20% driven by strength in streaming and performance. Digital revenue and streaming revenue increased by 30%, reflecting the continued growth in streaming and the impact of digital field rules; performance revenue increased due to strong artist touring activity in Europe. The mechanical and sink revenue were flat, musicpublishing.org, 18% with a margin of 28.3%.
Brian: Additionally, streaming revenue grew 11, 4% on a normalized basis.
Brian: An improvement from the 9% we reported last quarter.
Brian: Subscription streaming revenue grew 14% or 12% on a normalized basis.
Brian: Ported by DSP pricing increases.
Brian: AD supported revenue increased by 10%, reflecting sequential improvement from traditional formats as well as the impact of the Tic Tac renewal, which went into effect last quarter.
Brian: Physical revenue increased 13% driven by strong releases in the U S, Japan, and U K, including releases from Prince <unk> mirror and share.
Brian: Turning in the cash back, saw an $8 million from the prior year quarter. $29,000,000 due to increased spend on technology. Operating cash flow increased 40% to $293 million from $209 million in the prior year quarter. Operating cash flow conversion was 65% of adjusted original. Free cash flow increased 40% to $164 million from $188 million in the prior year quarter.
Brian: Our <unk> services and expanded rights revenue decreased 4% due to lower merchandising revenue, partially offset by higher concert promotion revenue in France and Japan.
Brian: Licensing revenues grew by 81%.
Brian: Primarily due to the aforementioned catalog licensing agreement extension as well as the timing of new licensing deals primarily in the U S.
Brian: Recorded music adjusted OIBDA increased 36% with a margin of 28, 5% an increase of 440 basis points.
Brian: The increase in operating cash flow and pre-cash flow was primarily driven by strong operating performance and Taimina the GST Renewal. As of December 31st, quarter end, we had a cash balance of $754 million, total debt of $4 billion, and Net Debt of $3.3 billion. At the end of the quarter, our weighted average cost of debt was 4.6%, and our near maturity date was 2028.
Brian: On a normalized basis.
Brian: Adjusted OIBDA increased by 11% with a margin of 24, 8% an increase of 50 basis points.
Brian: Music publishing continues to deliver strong results.
Brian: With revenue growth of 20% driven by strength in streaming and performance.
Brian: Digital revenue in streaming revenue increased by 30%, reflecting the continued growth in streaming and the impact of digital deal renewals.
Brian: Performance revenue increased by 11% due to strong artist touring activity in Europe.
Brian: We always look to take advantage of market conditions to optimize our capital structure. To that end, on January 24th, we repriced our terminal, extending its maturity date to 2031 and lowering our go-forward average cost by $25,000. As Robert Mendelsohn just announced a plan that will enable us to sharpen our focus on core areas of our business and accelerate our Go-Forward Strategy. I will provide an overview of the financial impact. You can also refer to the 8K we filed yesterday for further details. The plan will deliver $200 million of annualized run rate cost savings by the end of fiscal 2025, including facets associated with our previously disclosed financial transformation initiative.
Brian: While mechanical and St revenues were flat.
Brian: Music publishing adjusted OIBDA increased 18% with a margin of 28, 3%.
Brian: Yes.
Brian: Turning to Capex, we saw an $8 million increase from the prior year quarter.
Brian: $29 million due to increased spend in technology.
Brian: Operating cash flow increased 40% to $293 million from $209 million in the prior year quarter.
Brian: Free cash flow increased 40% $264 million from a $188 million in the prior year quarter.
Brian: The increase in operating cash flow and free cash flow was primarily driven by strong operating performance and timing of the DSP renewal.
Brian: We will allocate a majority, www.WarnerMusicGrp.com, as well as new skill sets and tech capabilities. The plan will result in a pre-tax charge of approximately $140 million, which is composed of $85 million in severance costs and a $55 million non-cash impairment charge related to the businesses we are expecting to cover. The net after-tax charge is estimated to be $105 million.
Brian: As of December 31 quarter end.
Brian: We had a cash balance of $754 million.
Brian: Total debt of $4 billion and net debt of $3 3 billion.
Brian: At the end of the quarter, our weighted average cost of debt was four 6% and our nearest maturity date with 2028.
Brian: We always look to take advantage of market conditions to optimize our capital structure.
Brian: For the remainder of fiscal year 2024, the foregone revenue impact on recorded music artist services and expanded rights is estimated to be approximately $45 million. With negligible impact, it's up to those... Approximately $120 million of pretest charges will be incurred by the end of fiscal 2024, of which $55 million relates to the previously mentioned non-cash and carbon chart. The remaining $65 million will be related to severance costs.
Brian: To that end on January 24th we repriced our term loan.
Brian: Extending its maturity date to 2031 and lowering our go forward average cost by 25 basis points.
Brian: As Robert mentioned, we.
Brian: We just announced the plan that will enable us to sharpen our focus on core areas of our business and.
Brian: Right our go forward strategy.
Brian: I will provide an overview of the financial impacts and you can also refer to the 8-K, we filed yesterday for further details.
Brian: Based on the timing of payments, we'll have a cash impact of $35 million in fiscal 2024. We believe that our plan will position us to focus on mission-critical areas, bringing more capital to deploy at the highest return opportunity, ultimately driving shareholder value. As we look ahead, and as Robert said, Q2 is off to a solid start. Our Q2 release date will feature new music from Dua Lipa. Megan Lee Stallion, P.A. Spring Day, Benson Boone, Gabby Barrett, Peter Fox, and The Black Heed, among many others.
Brian: The plan will deliver $200 million of annualized run rate cost savings by the end of fiscal 2025 <unk>.
Brian: Including benefits associated with our previously disclosed financial transformation initiative.
Brian: We will allocate a majority of the cost savings to increase investment in our core businesses as well as new skill sets and tech capabilities.
Brian: The plan will result in a pretax charge of approximately $140 million, which is composed of $85 million in severance costs.
Brian: $35 million non cash impairment charge.
Brian: We are excited about albums that we have planned for some of our superstar artists scheduled for later this year as well. Regarding the BMG roll-off... We expect the revenue impact to increase to approximately $25 million dollars in fiscal future. This amount will increase the quarterly run rate of approximately $35,000,000 by Q4.
Brian: Related to the businesses we are exiting.
Brian: The net after tax charges estimated to be $105 million.
Brian: For the remainder of fiscal year 2024, the foregone revenue impact to recorded music artist services and expanded rates is estimated to be approximately $45 million.
Brian: With negligible impact to adjusted OIBDA.
Brian: Fully rolling off by the end of fiscal 2024, as BMG gradually brings other digital partners in-house. As a reminder, the continuation of BMG's physical distribution will occur by the end of October 2024. In closing, our goal remains... to deliver healthy top-line growth, margin expansion, and Fraud Cash Flow Conversion on Consistent Base. Both the actions we took..., as well as our Stronger Relief League will position us favorably to deliver on these objectives in 2024 as well as for the long term. Thank you to everyone for joining us today.
Brian: Approximately $120 million on a pre tax charge will be incurred by the end of fiscal 2024.
Brian: Of which $55 million relates to the previously mentioned non cash impairment charge.
Brian: The remaining $65 million will be related to severance costs, which based on the timing of payments will have a cash impact of $35 million in this fiscal 2024.
Brian: We believe that our plan will position us to focus on mission critical areas.
Brian: Bringing up more capital to deploy at the highest return opportunities ultimately driving shareholder value.
Operator: We will now open the call for questions. Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.
Brian: As we look ahead and as Robert said Q2 is off to a solid start.
Brian: Our Q2 release slate will feature new music from Topeka.
Brian: <unk> stallion.
Ken Tancatecua: One moment for questions. Our first question comes from Ken Tancatecua with Barclays. You may call the line. Thank you. So, Robert, and Brian, one for both of you, if you could, you know, if you could help us understand what you will do differently as a result of the new plan you announced, and you also mentioned an increase in music investment. Could you help us clarify that and also what that really involves in terms of things that you might change? I mean, does it mean an arts tech shop or, you know, you invest in over a longer term or in different areas? And along the same lines, how should we measure success? www. WarnerMusicGrp.com. All right, thank you.
Brian: <unk>.
Brian: Green day events in June.
Brian: Eric <unk> box and the black keys, among many others.
Brian: We are excited about our albums that we've planned for some of our superstar artists scheduled for later this year as well.
Brian: Regarding the BMG rollout.
Brian: We expect the revenue impact to increase to approximately $25 million in fiscal Q2.
Brian: This amount will increase to a quarterly run rate of approximately $35 million.
Brian: Q4.
Brian: Fully rolling off by the end of fiscal 2024 as BMG gradually brings other digital partners in house.
Brian: As a reminder, this continuation of BMG physical distribution.
Brian: Occur by the end of October 2024.
Brian: In closing our goal remains to deliver healthy top line growth margin expansion and strong cash flow conversion on a consistent basis.
Robert Kinsel: What we're doing is we're creating a flagship that starts with efficiency and operating leverage, that's helping us grow efficiently and free up all my time, all along the way. The use of the money is really in two areas. Primarily in music, and a little bit in time to afford all of that.
Brian: Both the strategic actions, we're taking as well as our stronger release slate will position us favorably to deliver on these objectives in 2020 or as well as for the long term.
Speaker Change: Thank you to everyone for joining us today, we'll now open the call for questions.
Robert Kinsel: In music today, if you look at our deal pipelines, we have quite a lot of opportunities that we can pull in parallel lines because, you know, how we manage our balance sheet. Our dividends, you know, we're operating responsibly, and we have a lot more opportunities that may become effectively important. So, looking at that, and American musicians, etc.
Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment for questions.
Speaker Change: Okay.
Speaker Change: Our first question comes from Kevin <unk>.
Kevin: Thus far with Barclays you May proceed.
Kevin: Great.
Kevin: Thank you.
Kevin: So Robert Brian one for both of you as you could.
Kevin: If you could help us understand what you would do differently as a result of.
Robert Kinsel: and we're being really thoughtful and intentional about where we want to invest. So all of this work is giving us a lot more dry powder. We'll put that in place, and obviously, Chris Perrick.
Speaker Change: The new plan you announced.
Speaker Change: And also you mentioned an increase in music investment.
Kevin: Could you help us scale that and also what that Julie and loans.
Kevin: In terms of things that you might change I mean does it mean anr steps up or English.
Robert Kinsel: It's really important that tech is supporting efficient growth of the company and introducing as much automation as possible into our systems and processes, both on the recorded side as well as on the publishing side. They have also helped us monetize our entire catalog. I'll give you one small example, which is, you know, when you manage millions of copyrights, that's a lot of metadata. That's a lot of thumbnails for a whole bunch of years, and freshness of thumbnails or motion art, things of that nature, and neither holds strings with host Grimond. But it's really difficult to do that manually across such a large volume of content.
Kevin: Invest in longer term.
Kevin: Different assets.
Kevin: And along the same lines, how should we measure success of the plan. If you could outline that that would be helpful. Thank you.
Speaker Change: Alright, thank you.
Kevin: So.
Speaker Change: What we're doing is.
Speaker Change: We're creating a flywheel that starts with efficiency and operating leverage.
Speaker Change: Helping us that's helping us grow efficiently on free up more money.
Speaker Change: All along the way.
Speaker Change: The.
Speaker Change: Use of the money.
Speaker Change: It is really in two areas.
Speaker Change: Predominantly in music and little bit impacted.
Speaker Change: To support all of that.
Speaker Change: And music today, if you look at our fueled pipelines.
Speaker Change: Alright.
Speaker Change: Quite a lot of opportunities.
Speaker Change: We can fully materialize.
Speaker Change: How we manage our.
Robert Kinsel: So we developed an AI tool that helps us update and create new models. There are lots of tricks of this trade that we can deploy the technology to help Blackfriars as well. And then there are other new monetization opportunities that we can lean into. So, in combination. Both of those, you know; technology helps us be more efficient, and music, we believe, has lots of opportunities, and we're much more intentional about them in the framework that we developed. And Kenan and Brian, I would just add, as Robert said, that...
Speaker Change: Our balance sheet.
Speaker Change: Our dividends.
Speaker Change: Operating responsibly.
Speaker Change: And we have a lot more opportunities.
Speaker Change: <unk>.
Speaker Change: <unk> become effectively a forward.
Speaker Change: So looking at that.
Speaker Change: Combined with an investment framework.
Speaker Change: Which allows us to do.
Speaker Change: Even more selective about those opportunities and this is a framework to be developed based on the data that we're collecting from third party third parties, our first party data and.
Brian: The charge here is that the efficiencies will add operating leverage and help us drive that flywheel. But for 24, you should expect the impact to be fairly muted. It will take some time for us to implement and start to ramp up the savings. And it's similar on the investment side, which, as Robert said, will continue to drive our pipeline of, not necessarily M&As necessarily but also A&R and acquisition of catalogs as well as licensing of artists. And those take time as well, and those investments I think you will start to see in our results, and we'll continue to update on that. The overriding benefit of this is to add confidence and flexibility to our long-term goals for healthy cut line and margin expansion on a consistent basis, and so I think you'll start to see this ramped up in the 25s. Thank you. One moment for questions. Our next question comes from Benjamin Swinburne with Morgan Stanley. You may proceed. Thanks. Good morning.
Speaker Change: Real time trends et cetera, and we're being really thoughtful and intentional about where we want to invest.
Speaker Change: And obviously with Teck.
Speaker Change: It's really important that the tech is supporting efficient growth of the company.
Speaker Change: And introducing as much automation as possible into our systems and processes.
Speaker Change: Both on the recorded type as well as on the publishing side.
Speaker Change: It also helps us monetize our entire catalog I'll give you one small.
Speaker Change: Example.
Speaker Change: As you know when you manage millions of copyrights.
Speaker Change: A lot of metadata, that's a lot of thumbnails on.
Speaker Change: A bunch of the USPS.
Speaker Change: Freshness of thumbnails or motion or things of that nature.
Speaker Change: Help streams, which hopes revenue.
Speaker Change: But it's really difficult to do that manually across such a large volume of content. So we developed an AI tool that helps us updated creative New Orleans setup. So there are lots of tricks of the strength that we can deploy that technology to help drive revenue as well and then there are other new monetization opportunities that we come in at.
Benjamin Daniel Swinburne: Robert, two questions for you, one about the industry and one about your company. On the industry front, over the last year, particularly when you first started, you talked a lot about better aligning incentives between streamers and labels and artists. It feels like a lot happened positively last year in 2023 in that direction, but knowing you, I'm sure you think just getting started.
Speaker Change: So in combination.
Speaker Change: Both of those that helps us be more efficient and music, we believe us lots of opportunities.
Speaker Change: More intentional about them based on the framework coming to work.
Speaker Change: And cannot it's Brian I would think that as Robert said.
Speaker Change: The charge here is that these efficiencies will.
Benjamin Daniel Swinburne: So just wanted to get sort of an update on where your focus areas are in terms of continuing to move that alignment forward for the betterment of the whole industry. And then on the company level, there's a lot of change happening at Warner Music, a lot of technology that seems to be getting implemented, particularly in the hands of your creative executives. How is the system handling that?
Speaker Change: Add operating leverage and help us drive that.
Speaker Change: Hi will.
Speaker Change: For 24.
Speaker Change: You should expect the impact to be fairly muted. It will take some time for us to implement and start to ramp the savings.
Speaker Change: And it's similar on the investment side.
Speaker Change: As Robert said, we will continue to drive our pipeline.
Benjamin Daniel Swinburne: Any stress that has popped up, or do you think there's sort of alignment across the organization as you sort of bring technology and creativity together internally? Thanks, Ben. So, your first question about the industry and how we're aligning. Yeah, you're right. A year ago, we were just talking about things.
Speaker Change: And not M&A necessarily but also anr and acquisition of catalogs as well as license embarrassed.
Speaker Change: And those take time as well and those investments I think you will start to see in our results and we will continue to update on that.
Speaker Change: The overriding benefited this is to add confidence and flexibility to our long term goals for healthy topline and margin expansion on a consistent basis and so I think youll start to see this ramp in 'twenty five.
Robert Kinsel: And today, we've got a little round of price increases by all the important DSPs, and we have new, sort of audit-focused models around the actual remuneration. The initial stages of it, as you pointed out, so it's incredible to actually see the progress in what I would say is a fairly short amount of time because these things are complex. Co-studies, to orchestrate all of that.
Speaker Change: Got it thank you.
Speaker Change: Thank you.
Speaker Change: One moment for questions.
Speaker Change: Our next question comes from Benjamin Swinburne with Morgan Stanley You May proceed.
Benjamin Daniel Swinburne: Thanks, Good morning.
Benjamin Daniel Swinburne: Robert two questions for you one about sort of the industry and one about about your company.
Benjamin Daniel Swinburne: On the industry front.
Robert Kinsel: And so I think what you will see is continued progress on that on both sides. I am very focused on this. In my opening remarks, I mentioned that this is one of our three priorities. And for me, it's personally a very, very high priority. I spend a lot of time thinking about it, a lot of time working on it with the team, and a lot of time working on it with our DSP partners.
Benjamin Daniel Swinburne: Over the last year, particularly when you first started you talked a lot about better aligning incentives between streamers and labels and artists it feels like a lot happened.
Benjamin Daniel Swinburne: Positively last year in 2023 and that direction, but.
Benjamin Daniel Swinburne: Billing you I'm sure you think just getting started so just wanted to get sort of an update on where your focus areas are in terms of continuing to move to that alignment forward to the betterment of the whole industry.
Robert Kinsel: It is important. I think this is one of our very few opportunities. Pricing overall is a very, very large opportunity for the industry. And we just need to do this responsibly so that we maintain growth together with our DSP partners, but at the same time... You know, we're going to focus on art and expand it, and the way I talk about it is that we should not only be hunting, but we should also be marketing. And the industry, obviously, has focused on growth over the last 15 minutes, and hunting is only one part of it.
Benjamin Daniel Swinburne: And then on the company.
Benjamin Daniel Swinburne: There's a lot of change happening at Warner music, a lot of technology that seems to be getting implemented, particularly in the hands of your creative executives how is the system handling that any.
Benjamin Daniel Swinburne: Any stress.
Benjamin Daniel Swinburne: This has popped up or do you think there is sort of alignment across the organization as you sort of bring technology and creativity together internally. Thanks a lot.
Speaker Change: Thanks Ben.
Robert Kinsel: And we just need to do both of those things in different markets and be much more intentional about that. The second thing about the company. I've refreshed quite a lot of the leadership team, there are a lot of other people who joined the company, a lot of people who left the company, and we're integrating two cultures, obviously, music culture, rooted in media and creativity, and technology culture, rooted in coding. And they're quite different.
Benjamin Daniel Swinburne: Your first question on the industry and how we're aligning.
Benjamin Daniel Swinburne: Yes.
Benjamin Daniel Swinburne: You are right a year ago.
Benjamin Daniel Swinburne: We're just talking about things.
Benjamin Daniel Swinburne: Today.
Benjamin Daniel Swinburne: We've got full round of price increases.
Benjamin Daniel Swinburne: And all of the important dsp's.
Benjamin Daniel Swinburne: And we have new recorded focused.
Benjamin Daniel Swinburne: Our models.
Benjamin Daniel Swinburne: Around the actual remuneration.
Benjamin Daniel Swinburne: <unk>.
Benjamin Daniel Swinburne: The initial stages of it.
Speaker Change: You pointed up so it's incredible to actually see the progress in what I would tell you is a fairly short amount of time because these things are complex on people compete with each other.
Robert Kinsel: What I can tell you is that I thought it was going to be a lot harder than it has been for us. Um.., and I think credit for that goes to me, it goes to Max Lusada, Ariel Partin, the leadership team has really embraced this, and I think, generally, people will. I don't want to speak about people in the music industry unfairly in this regard because everybody wants technology to help them. When you have it at your disposal, it's wonderful.
Benjamin Daniel Swinburne: So it's not easy to.
Benjamin Daniel Swinburne: Orchestrate all of them.
Benjamin Daniel Swinburne: And.
Benjamin Daniel Swinburne: So I think what you will see is continued progress on that on both sides I am very focused on this.
Benjamin Daniel Swinburne: In my opening remarks, I've mentioned that as one of our three priorities and for me personally.
Benjamin Daniel Swinburne: Very very high priority I spent a lot of time thinking about it a lot of time working on it but the team.
Benjamin Daniel Swinburne: A lot of time working on it with our DSP partners. It is important I think this is one of our very large opportunities pricing overall is very very large opportunity for the industry.
Robert Kinsel: It makes a lot of decisions. It's kind of cool, for frequency and reach in terms of marketing, even through more content through our systems, through our supply chain. And so if you can have it, you want it. And, you know, the team has done an incredible job over the last 10 years, having far less of it, at least a little bit, a great job, but they want the help. So the leadership team has really kicked in, jogging, creating the processes on all of this. I'm very, very confident that... What I set out to do is already happening, and it moves the crew each quarter and each year. So, yeah, I'm very confident. Thanks a lot.
Benjamin Daniel Swinburne: Think about responsibly, so that we maintain growth together with our DSP partners, but at the same time.
Benjamin Daniel Swinburne: Our focus on ARPA and expand it.
Benjamin Daniel Swinburne: I talked about it as well.
Benjamin Daniel Swinburne: It should be not only hunting, but we should also be harvesting and the industrial obviously is focused on growth over the last 15 years that was only hunting that we just need to do both of those things.
Benjamin Daniel Swinburne: Different markets and being much more intentional about that.
Benjamin Daniel Swinburne: Second second thing on the company.
Benjamin Daniel Swinburne: But you asked about how obviously refreshed, but a lot of the leadership team there.
Benjamin Daniel Swinburne: Lots of other people, who joined the company a lot of people left the company.
Benjamin Daniel Swinburne: Or integrating two cultures right obviously.
Operator: Thank you. One moment for questions. Our next question comes from Michael Morris with Nugent Heim Security. He may proceed. Thank you. Good morning, guys.
Benjamin Daniel Swinburne: Music culture.
Benjamin Daniel Swinburne: Rooted in media and creativity.
Benjamin Daniel Swinburne: Technology culture rooted in coding.
Benjamin Daniel Swinburne: They are quite different.
Michael C. Morris: Two questions. One about your content fleet and one about, So on the first one, can you talk about how much of the revenue momentum that you saw, particularly in recorded music streaming, was fueled by that improved content performance as opposed to some of the underlying trends like price increases in the industry? And as we look at the fiscal second quarter, should we expect further acceleration in the rate of streaming growth, given that you have this robust slate and the comparisons are easier? So that's my first question, and then second. On the TikTok relationship, you guys reached an agreement with TikTok. There is a very high-profile dispute in the market with one of your peers, having taken their content off of the service and not reaching a new agreement So I understand you can't speak about somebody else's deal, but maybe, in light of what we're seeing in the market, what gives you confidence that the TikTok deal you did was right for you and you are artists, and how is it contributing to your growth at this point? Thank you. Hey Michael, it's Brian.
Benjamin Daniel Swinburne: I can tell you is that.
Benjamin Daniel Swinburne: <unk>.
Benjamin Daniel Swinburne: I thought it was going to be a lot harder than it has been for us.
Benjamin Daniel Swinburne: And I think but.
Speaker Change: Credit for that doesn't go to me it goes to box without rvs.
Speaker Change: <unk> brought in the leadership team has really embraced this and and I think generally people.
Speaker Change: Speak about people from the music industry unfairly in this regard because everybody wants technology to help them.
Speaker Change: And when you have at your disposal just.
Speaker Change: Systems through our supply chain and so if you can have it you wanted.
Benjamin Daniel Swinburne: The team has done an incredible job over the last 10 years, having far less of it and they still did a great job, but they wanted to help so the leadership team has really gelling, great new processes around all of this.
Benjamin Daniel Swinburne: I am very very confident that what.
Benjamin Daniel Swinburne: What I set out to do is already happening.
Benjamin Daniel Swinburne: I will just I will just accrue in each quarter and each other.
Benjamin Daniel Swinburne: And each year.
Brian: I'll take the first part of that, just on the acceleration, particularly in recorded music streaming in the quarter. And as you know, there's a lot that goes into that, but certainly price increases contributed, and I think we called that out. But also, a stronger slate, particularly year over year, came out of Q4 with momentum, and some launches in Q1.
Benjamin Daniel Swinburne: Very confident.
Speaker Change: Thanks, a lot.
Speaker Change: Thank you.
Speaker Change: One moment for questions.
Benjamin Daniel Swinburne: Our next question comes from Michael Morris with Guggenheim Securities You May proceed.
Michael C. Morris: Thank you good morning, guys.
Michael C. Morris: Two questions one about your content fleet and what about your tick tock relationship.
Michael C. Morris: So on the first one can you talk about how much of the revenue momentum that you saw particularly in recorded music streaming was fuelled by that improved content performance as opposed to some of the underlying trends like price increases in the industry.
Brian: And as we sit here today, as Robert alluded to, the slate is strong coming into Q2, and we're excited about the back half of the year. So as we said, and this has been a focus for Robert, Max, and the team, a consistent pipeline of releases, and that has been showing up in the results. And so we are expecting that to continue.
Michael C. Morris: And as we look at the fiscal second quarter, we should we expect further acceleration in the rate of streaming growth given that you have this robust slate and the comparisons ease a bit.
Michael C. Morris: Right.
Speaker Change: That's my first question and then second.
Robert Kinsel: Um... So, Yeah, obviously, I don't know the details of their dispute. All I can tell you is, I have a pretty unique experience in this, obviously haven't been on the other side, and having gone through these types of disputes where content has come down. And so I know exactly what all... Lucien and Xiao are feeling. I've gone through all of those feelings multiple times, signing out, and Bye. It is not great for either side, obviously, because I think everybody wants to consummate a deal, whatever you read in the press. Don't believe it, because you don't know the definitions of any of the words are there, and that is where all the disputes begin. And, you know, the thing that I can tell you is that I know both really well, and I'm confident that they will, at some point, sign an agreement. And, from the YouTube experience, music is incredibly helpful to the virality of content, as people, when they're creating content, love friends, they love music. That's what helps it significantly, makes it better for the soundtrack.
Michael C. Morris: On the tick Tock relationship you guys reached a new agreement would take time.
Michael C. Morris: This is a very high profile disputes in a market with one of your peers, having taken their content off of the service and not reaching a new agreement. So I understand you can't speak about somebody else's deal, but maybe.
Michael C. Morris: In light of what we're seeing in the market. What gives you confidence that they picked up deal you did was right for you and your artists and how is it contributing.
Speaker Change: To your growth at this point thank you.
Michael C. Morris: Hey, Michael It's Brian I'll take the first part of that just on the acceleration, particularly in recorded music streaming in the quarter and as you know there's a lot that goes into that but certainly price increases contributed and I think we called that out but also the stronger slate.
Speaker Change: <unk>, particularly year over year came out of Q4 with momentum.
Brian: Some launches in Q1 and as we sit here today as Robert alluded to that displayed a strong coming into Q2, and we're excited about the back half of the year. So as we've said and it has been a focus for Robert Max and the team is consistent pipeline of releases and that has been showing up in the results.
Brian: And so we are expecting for that to continue.
Brian: And I guess I'll take the Pixar currently.
Brian: Sure.
Speaker Change: So yes.
Robert Kinsel: So obviously, let's value those two ways and that form. And conversely, TikTok... All of those platforms are obviously helpful to making music popular. We all love that on the music side. And user engagement is great. I spoke about it in my opening. This is also what makes music great and different from all the other forms of media.
Speaker Change: Yes, as you said, obviously I don't know the details of their dispute.
Speaker Change: What I can tell you is I have a pretty unique.
Speaker Change: The unique experience and this obviously haven't been on the other side.
Brian: Having gone through these types of disputes.
Brian: We're content has come down.
Brian: And so I know exactly what both.
Brian: Lucien and show our feeling of gone through all of those feelings multiple times.
Robert Kinsel: So there are mutual benefits here, and it's just about what is the right fair value. And sometimes you have to go through the great discovery of that counterfactual. And that's okay, too, right? Because people find out exactly what it is and what it means to them. Obviously...
Brian: Yes.
Brian: And.
Brian: It is it is not.
Brian: Great.
Brian: For either size, obviously, because I think everybody wants to consummate a deal.
Brian: Whatever you read in the press.
Brian: Don't believe it.
Robert Kinsel: I have an interest in them working it out, I want them to work it out, and I think they're both reasonable people that will find a compromise as far as our deal is concerned. I'm always very confident in the deals that we do. We don't follow other companies. We don't make carving copies of other deals.
Brian: You don't know the definitions of any other awards.
Brian: There and that is where all the disputes begin.
Brian: And.
Brian: And I am confident that they will.
Brian: At some point find an agreement because.
Robert Kinsel: We do our own, which is why we did the one last year. I gather I'm a unique experience from both sides.... It wasn't easy with TikTok, which was very difficult, too, but we got there. For us, it was there. It was a year ago, but also at a different time.
Brian: And from the Youtube experience music.
Brian: Music is incredibly helpful to virality of content people when theyre, creating content.
Brian: Hello trends music, that's what helps us significantly makes it better soundtrack.
Brian: So obviously, that's valuable to a platform.
Brian: And Conversely.
Robert Kinsel: So I don't know what is driving Universal's revisions, but I don't know. If there's any way we can help them, we will. All of us.
Brian: Pick dock due to Reals and all of those platforms are obviously hopeful to making music popular right, we all love them.
Brian: On the on the music side.
Operator: And I'm confident they'll start it out. We see our ad-supported revenue growth at 10% a quarter. TikTok and the deal we executed last quarter certainly contributed to that. So we like our TikTok deal, and it continues to be a driver of growth. Thank you. One moment for questions. Our next question comes from Benjamin Black with Georgia Bank. You may proceed. Great, good morning, thanks for taking my question. So, Robert, could you give us an update on some of your thoughts around, you know, perhaps, or maybe the discussion you're having is with, I think, the larger DSGs and their respective moves to more of an artist-centric model. It sounds like you're optimistic for some incremental positive change in years to come, so it'd be great to hear your thoughts on that. And then, secondly, on the publishing side of the business, it just continues to outperform, so I'd be sure if you could, you know, unpack what's going on there from an operational standpoint, and how sustainable and durable are the current trends there.
Brian: User engagement is great I just spoke about it in my opening right that this is also what makes music rate different from all other forms of media.
Brian: So there are mutual benefits here and it's just about what is the right fair value exchange and sometimes you have to go through the price discovery at both as kind of a step.
Brian: And that's okay, too because people find out exactly what it is and what it means to them.
Brian: Obviously.
Brian: I have an interest in them working it out I want them to work it out.
Brian: And I think they are both reasonable people that will find a compromise as far as our deal.
Brian: Im very confident in the deals that we do we don't follow other companies. We don't we don't do carbon copies of other deals we do our own.
Brian: Which is why we.
Brian: The one last year.
Speaker Change: I got it.
Brian: Nick.
Brian: Experience from both sides.
Brian: Two two.
Brian: To bridge our decision as it wasn't easy.
Brian: It's very difficult to but we got there.
Brian: And for Us.
Brian: For us it was fair, but it was a year ago.
Brian: So different time.
Benjamin Black: Thank you. Thank you, and ArmaDFB. So our discussions are in the early stages because we first have to develop our frameworks and how we think about the world evolving from here.
Brian: So I don't know what is driving universals.
Brian: Positions, but.
Brian: No.
Brian: The way, we can help them we will.
Brian: All of us and I'm confident they'll sort it out.
Brian: Michael just to add I mean, Robert said, we're obviously wishing for a collaborative resolution there, but tictoc is U.
Robert Kinsel: This is one of the reasons I also brought Carlita Higginson into the company. She's a very strong innovator of deal structure, both across publishing and recorded music, and doing so in a very collaborative manner, but she knows how to drive significant change. And so we've been developing this strategy and starting to talk to DFTs about it. There are multiple different ways to look at it. On the one hand, there are options that provide zero disruption to users, and there are some that provide mild ones, and then there are some that provide more radical ones.
Brian: See our AD supported.
Brian: Revenue growth at 10% in the quarter tick tock and the deal we executed last quarter, certainly contributed to that and so.
Brian: We like our Tic Tac deal and it continues to be a driver of growth.
Speaker Change: I appreciate it.
Speaker Change: Thank you.
Brian: One moment for questions.
Brian: Our next question comes from Benjamin Black with Deutsche Bank You May proceed.
Benjamin Black: Great. Good morning, Thanks for taking my questions Robert could you give us an updates on sort of your thoughts around.
Robert Kinsel: And, you know, the work that we need to do is figure out how we explore all of them, how we explore them across the spectrum, and what is the best way to roll it out that helps do it in a way that continues to drive growth, subscribers, more new people, and a better experience, but at the same time optimizes it. And, uh, none of this should be interpreted as we want to increase pricing dramatically but then slow down growth at the same time, which is what happened to some, you know, other companies. Uh, that is not it.
Benjamin Black: Perhaps or maybe the discussions youre, having with some of your larger DSP and their respective moves to more of an artist centric model. It sounds like you're optimistic for some incremental positive change in.
Benjamin Black: Near to medium term, so it'd be great to hear your thoughts on that and then secondly on the publishing side of the business. It just continues to outperform that I'd be curious if you could unpack what's going on there.
Benjamin Black: Operational standpoint, and how sustainable are durable or the current trends there. Thank you very much.
Speaker Change: Thank you.
Speaker Change: No.
Speaker Change: The one on the Dsp's.
Robert Kinsel: Uh, again, I have experience from the other side of growth, and I want to maintain that. So I think being thoughtful about what also drives the DSPs is really, really important, and that is how we get there. So that's why I joined their business plans together with them to reach higher levels of growth for both of us. Um.., on the publishing side. Publishing is an incredible business. It's like, you know, when you see it from the outside, when you see it from the inside, it's truly an incredible business, and uh, and it's really uh, and obviously, there's the creative component of it, which we do incredibly well, but there's also the administration component of it, which is very tedious, very operational, very scaled, and it's blinding I mean, there's things that you have to do.
Speaker Change: Our discussions are in early stages.
Speaker Change: Because we've heard that the golar power frameworks and how we think about.
Speaker Change: The world developing from here.
Speaker Change:
Speaker Change: This is one of the reasons also abroad.
Benjamin Black: Carlita against them.
Benjamin Black: And to the company.
Benjamin Black: She is a very.
Benjamin Black: Strong innovator.
Benjamin Black: Deal structures, both across publishing and recorded music.
Benjamin Black: And doing so in a very collaborative manner.
Benjamin Black: But she knows how to drive significant change.
Benjamin Black: So we have been.
Benjamin Black: Within this strategy and started to talk to the USPS about it there are multiple different ways to look at it once.
Benjamin Black: There are options.
Benjamin Black: Provide zero disruption to users and there are some that provide mild ones and then there are some that provide more radical ones.
Benjamin Black: The work that we need to do is figure out how we explore all of them.
Benjamin Black: We explore them across the spectrum and what it is.
Benjamin Black: The best way to roll it out and how to do it in a way that continues to drive growth subscribers, one multiple and a premium experience, but at the same time optimizes. It.
Benjamin Black: And so none of this should be interpreted as we want to increase pricing dramatically, but then slow down the growth at the same time, which is what happened to some other companies.
Speaker Change: That is not us.
Speaker Change: Again have an experience from the other side.
Robert Kinsel: And that is also... It's where we can deploy technology to do it better, higher return, and more scale. I think Guy and Kerri-Ann are dividing their duties incredibly well, an excellent team, even Warner Channel, and they've been very, very operational for a long time, so the results are showing up basically. So I'm confident in their continued... Thank you. Very well.
Speaker Change: <unk>.
Speaker Change: Growth and I want to maintain that so I think being thoughtful about what also drives the dsp's.
Speaker Change: It is really really important.
Speaker Change: And that is how we count that as how we get there.
Speaker Change: So thats why im so I'll just have joined.
Speaker Change: Business plans together with them to reach.
Speaker Change: Higher levels of growth for both of us.
Speaker Change:
Robert Kinsel: Thank you. One moment for questions. Our next question comes from Rich Greenfield with Lightship Partners. You may proceed. Hi, thanks for taking the time to answer the question. Robert, part of the TikTok dispute seems like it's focused around AI and essentially not, there's obviously the obvious problem of third-party AI content from outside of things like TikTok being put on TikTok, but part of this dispute seems to be TikTok actually creating tools and enabling the creation of AI music that would count sort of as part of how they value or decide who gets what payment. And I'm just curious, as you think about your relationship with TikTok, can you just give us your view on sort of how you're dealing with them on AI music and sort of that broader idea of how Warner gets paid relative to the creation of AI music within their platform, if that makes sense? So, I would actually expand your question a little bit because the issue is not just TikTok; it's TikTok, YouTube, et cetera.
Speaker Change: On the publishing side.
Speaker Change: Publishing is an incredible business.
Speaker Change: It's like when you see it from the from.
Speaker Change: From the outside when you see it from the inside it is truly an incredible business.
Speaker Change: And it's really.
Speaker Change: It's obviously theres the creative component of it which we do incredibly well, but there is also the administration component of it.
Speaker Change: Is there a tedious very operational scale and is finding pennies all around the world in every culture around the world.
Speaker Change: So you have to do and that is also where are we.
Speaker Change: We can deploy technology to do it better and higher return and.
Speaker Change: And more scale.
Speaker Change: Uh huh.
Speaker Change: I think the.
Speaker Change: Gaiam Carryanne.
Speaker Change: Our dividing their duties incredibly well.
Speaker Change: Excellent team, leading Warner Chappell and they've been very very operational.
Speaker Change: For a long time, so the results are.
Benjamin Black: <unk>.
Benjamin Black: Based on that.
Benjamin Black: So I'm confident in their continued performance.
Speaker Change: Great. Thank you very helpful.
Speaker Change: Thank you.
Speaker Change: One moment for questions.
Speaker Change: Our next question comes from Rich Greenfield with <unk> partners you May proceed.
Rich Greenfield: Hi, Thanks for taking the question.
Rich Greenfield: Robert harder.
Rich Greenfield: Part of the tick tock dispute seems like it's focused around AI and essentially not theres obviously.
Rich Greenfield: Totally fair, totally fair. Yes, correct. It's a question that is obviously very relevant across all of the platforms because... The reason is, I can't recall which order it was in, but I basically, at some point, I spoke about my prioritization of partners for AI, starting with the platforms, then the secondary focus would be the generative AI engines, and the third, governments and regulations, in that order, because the platforms... Not only have the Gen AI engines, but they aren't Like those platforms that I mentioned, it's where no matter what the engine is, people will want the views and streams. That's the way it's designed out. So our work is focused on making sure that the rules of the road on those five corners respect copyright, and we have a lot of copyrights. Universal has a lot of copyrights, Sony has a lot of copyrights, and many others, Disney, etc.
Speaker Change: <unk> problem.
Rich Greenfield: Third party AI content from outside of things like tick tock being put on you kicked off but part of this dispute teams the tick tock actually creating tools and enabling the creation of AI music that would count sort of as part of how they vary.
Rich Greenfield: Value or decide who gets what payments I'm just curious as you think about your relationship with Big Todd could you just give us your view on sort of how youre dealing with them on AI music in sort of that broader I was like what.
Rich Greenfield: How are you wondering gets paid relative to the creation of the AI music within their platform if that makes sense.
Speaker Change: So I would actually expand your question a little bit because the issue is not just the comp.
Speaker Change: It's vik Doc do too.
Speaker Change: Totally fair totally fair.
Benjamin Black: Correct.
Speaker Change: Youre asking a question that is obviously, it's very relevant across all of the platforms.
Speaker Change: Because.
Speaker Change: The reason.
Speaker Change: I can't recall, which quarter it was but I basically at some point I spoke about my prioritization of.
Speaker Change: Partners for AI, starting with the platforms and the secondary focus would be the generator of AI engines in the third.
Speaker Change: Governments and regulation and that order because the platforms.
Speaker Change: Not only have the German AI engines, but they are really the place where the content ends up it's like those platforms that I mentioned is why no matter what the engineers.
Robert Kinsel: So, it's really important to have clear rules of the road, not only for the first-party content that they're creating, which they are, But even more importantly, what content is created is other tools that end up there. And I think that's generally the forgotten thing. That is really important, so it has to govern all of that. So that is why there are really all of them on my site.
Speaker Change: People will want the views streams.
Speaker Change: That's why it's going to end up so our work is focused on making sure that the rules of the road on those platforms.
Speaker Change:
Speaker Change: Respect copyright.
Speaker Change: We have a lot of copyright universal has a lot of copyright Sony as Lauder copyrights.
Speaker Change: Many others Disney et cetera, So it's really important to have clear rules of the road not only for the first party content that they are creating with our tools, but even more importantly for content that was created other towards the ends up there and I think that's generally like the forgotten thing.
Robert Kinsel: This is something that we have been working on. I can't share any details on this, but it is a very tough area of priority. This goes into my second document on increasing the value of music. I like this because it has copyrights to be respected, and others.
Speaker Change: That is really important so it has to be has the government all of that so that is why there are squarely all of them in my site.
Speaker Change: <unk>.
Benjamin Black: This is something that we have been working on I can't share any details on this but it is a very top.
Robert Kinsel: I'm sure they'll be doing a lot of research and putting in place albums and training on our copyrights so that they are respected. And eventually, the laws will reflect this, but the platforms will run ahead of the laws. And it's important that they do the right thing, and I think they will. You just need to make sure it's aligned across all of them, not just one and not the others in which they manage them.
Rich Greenfield: The area of priority. This goes into my second bucket on increase in the value of music.
Speaker Change: This is.
Rich Greenfield: Because.
Rich Greenfield: It has the copyrights to be respected.
Speaker Change: Outputs and training on our copyright has to be respected.
Speaker Change: And eventually the loss well reflected by the platforms will run ahead of the loss and it's important that they do the right thing and I think they will we just need to make sure that it's also aligns across all of them not just one and not the others.
Operator: I can see there's disputes between Universal and TikTok over that because these are fast-evolving technologies in agrofisheries. Thank you. One moment, real quick.
Speaker Change: So I can tell you.
Rich Greenfield: Disputes between between.
Bhatia Levi: Our next question comes from Bhatia Levi with UBS. He may proceed. Great, thank you. A follow-up on the streaming revenue growth side, can you talk about if you have already started to see any change in trends since Spotify implemented the policy change in the beginning of the year? And on ad-supported, how should we think about revenue growth going forward? Are there any changes in the royalty structure that could impact that trend? Thank you. Spacia, thanks. It's Brian.
Robert Kinsel: Say universally tictoc over that because these are fast evolving technologies.
Robert Kinsel: The ground is shifting.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: One moment for questions.
Robert Kinsel: Our next question comes from <unk> Levi with UBS you May proceed.
Speaker Change: Great. Thank you.
Rich Greenfield: On the streaming revenue growth side can you talk about if you have already started to see any change in trends since Spotify implemented the.
Robert Kinsel: Policy change in the beginning of the year and.
Robert Kinsel: On AD supported how should we think about revenue growth going forward are there any changes in the royalty structure that could impact that trend. Thank you.
Brian: I think you're referring to Spotify's reallocation of roughly $200 million over five years. Too soon to say. I think that's also going to take some time to wrap up, so we have not seen an impact of that yet. On the ad-supported side, again, you saw we broke it up versus subscription streaming, and it includes emerging platforms like TikTok, and we continue to see favorable stabilization there in the core ad-supported piece, excluding those emerging platforms. And so that does... tied more closely to the overall marketplace where we're coming off, I think, easy weaker comps year over year, so we're seeing continued growth of stabilization there as well. Thank you. One more follow-up, if I may.
Speaker Change: Back to you. Thanks, It's Brian I think you are referring to Spotify is reallocation of roughly the $200 million over five years.
Robert Kinsel: Too soon to say I think that's also going to take some time to ramp up so we have not seen an impact of that yet on the AD supported side again.
Speaker Change: Again, and you saw we broke it out versus subscription streaming and it includes the emerging platforms like Tech talk and we continue to see favorable stabilization there in the core at quarter piece, excluding emerging platforms.
Speaker Change: And so that does.
Brian: On the pacing of margin expansion through the year, how should we think about that this year as you approach the 100th expansion target? Thank you. As we had called out earlier in the last quarter, our back half has given us a stronger release slate. We will see our margin expansion pick up through the course of the year in Q3 and Q4. Okay. Thank you.
Speaker Change: Tied more closely to the overall marketplace square coming off I think easy weaker comps year over year. So we're seeing continued growth of stabilization in <unk> as well.
Brian: Got it. Thank you one more follow up if I may.
Brian: On the pacing of margin expansion through the year.
Brian: Should we think about that this year.
Brian: As you approach the 100 bps expansion target. Thank you.
Operator: Thank you. One moment for questions. Our next question comes from Sebastiano Petty with J.P. Morgan. Hi, thanks for taking the question. I think Robert, just stepping back for a second, high-level multi-year, you know, I guess your thoughts on a multi-year basis, thinking about some of the initiatives you're driving. I think, you know, you talked about the catalog again today. It seems to be a priority for you. Some of them are James Swinburne, Jason Bazinet, Michael Morris, David Farber, Aaron Watts, David Hebert, Aaron, I'll say again, Robert, another one, I guess, you know, for the Hunt and Harvest.
Brian: As we had a.
Brian: Called out earlier in last quarter or back half just given the release slate stronger release slate, we will see our margin expansion tick up through the course of the year in Q3 and Q4.
Brian: Okay. Thank you.
Speaker Change: Thank you.
Speaker Change: One moment for questions.
Brian: Our next question comes from Sebastiano Petti with JP Morgan you May proceed.
Speaker Change: Hi, Thanks for taking the question I think Robert just stepping back for a second high level multi year.
Brian: I guess your thoughts on a multiyear basis thinking about some of the initiatives Youre driving I think you talked about catalog again today it seems to be a priority for you.
Sebastiano Petty: How are you thinking about the timeline, perhaps, of maybe some of the segmentation changes that may occur at the DSP level? Is that going to be bifurcated to some extent between developed markets and emerging markets? And how are you thinking about that evolving over time?
Brian: Some of the.
Brian: Changes or the.
Speaker Change: The approach to distribution for independent seems like a longer term kind of priority for you as well.
Robert Kinsel: Thank you. Sure. Perfect, thank you. So, on some of the initiatives. Yes, there are quite a few.
Speaker Change: How long does that take to manifest itself, perhaps in the recorded music streaming metrics.
Speaker Change: And maybe just how youre thinking about the pacing of that is there additional implementation or changes from an investment perspective, they need to go into that and then.
Robert Kinsel: They're in twice already, so this is not like something that we're just planning. Like one of the reasons that we decided to step on the pedal and accelerate just because we already started to work on our growth levers months ago and have a clear vision of what we need to accomplish, and our team has dotted the show. And this goes back to one of the earlier questions. You will be discovering why this is amazing.
Speaker Change: Also again, Robert another one I guess.
Brian: The Hunton harvest.
Speaker Change: How are you thinking about.
Brian: You're the timeline, perhaps of maybe some of the segmentation changes, perhaps that may occur at the DSP level is that going to be bifurcated. Some extent between developed markets emerging markets and maybe just how youre thinking about that evolving over time. Thank you.
Robert Kinsel: Thank you. Continued Incremental Improvement. That is my goal, that every year, from all of these initiatives, we just drive incremental improvement, and just study, and forever. Thanks, man.
Speaker Change: Perfect. Thank you.
Operator:
Operator: So on some of the initiatives.
Operator: <unk>.
Operator: Yes, there are quite a few.
Robert Kinsel: We'll, we'll, we'll, we'll, we'll start getting ready. And, um... I would say on the distribution front, as you discussed, obviously, we're focused on efficiencies with our own supply chain, but then really, distribution is how we externalize that to third parties.
Speaker Change: They are in flight already.
Operator: So this is not like something that we're just planning like one of the reasons that we decided to.
Operator: Step on the pedal and accelerated just because we already started to work on our growth levers.
Operator: No.
Operator: Bounce back.
Speaker Change: And a.
Operator: A clear vision on what do we need to accomplish.
Robert Kinsel: It's a way of sequencing that, and I would say you'll start seeing the results of that over the course of, I don't know, the next one to two years. On the supply chain, internally, that will be much faster. And then on the distribution side, it will be in the time frame that I just mentioned, on the GSB Hubs and Harbors project. Changes like this can only be done responsibly. Usually paint, nine months, a year, to figure it out together with my partner.
Speaker Change: And our teams have started to Joe and this goes actually back to one of the earlier.
Sebastiano Petty: <unk>.
Sebastiano Petty: Two how the team is gelling well together.
Sebastiano Petty: We have more extreme growth streams across technology.
Sebastiano Petty: The business.
Sebastiano Petty: We're focused on those and some of them.
Sebastiano Petty: I think we will start yielding results this year already.
Robert Kinsel: Think of all of this is.
Robert Kinsel: Continued incremental improvements that is Michael every year from all of these initiatives, we just drive incremental improvement just study.
Robert Kinsel: So this is not something where you go and strong-arm somebody; you have to work together collaboratively, do lots of analysis, figure out what the business plan is, and that is the right approach. And we did that several times when I was on the other side. So, that is how I think about it, and you have to do it with multiple partners, you have to coordinate, so that is the responsible way to approach it, and I think when you think about the different markets, it is very obvious that, www.warnermusicgrp.com. And I'm glad that some of our partners are already seeing it that way as well because it is in our mutual interest. Home. You've got to do it right, One moment for questions. Our next question comes from Cutgun Marat with Evercore ISI, do you know... Great.
Robert Kinsel: And forever.
Robert Kinsel: But.
Robert Kinsel: You'll start seeing that this year.
Robert Kinsel: And.
Robert Kinsel: I would say on the distribution front as you discussed obviously first we're focused on efficiencies with our own supply chain.
Robert Kinsel: But then really distribution as how we external lifestyle to third parties. So.
Robert Kinsel: It's the right sequencing of that.
Robert Kinsel: I would say youll start seeing the results of that.
Robert Kinsel: Over the course of next one to two years, obviously on the supply chain internally that we will start seeing much faster and then on the distribution side.
Robert Kinsel: That will be on the patent that I've just mentioned.
Robert Kinsel: On the DSP and harvest profits.
Robert Kinsel: No.
Robert Kinsel: Changes like this.
Speaker Change: You do them responsibly.
Robert Kinsel: Usually take.
Robert Kinsel: I don't know nine.
Robert Kinsel: Nine months, a year to figure out together with partners and so this is not something where you go in strong arms somebody you'll have to work together collaboratively do lots of analysis.
Operator: Good morning and thanks for taking the question. I just wanted to follow up on the outlook for recorded music ad supported trends. I think growth accelerated from low single digits two quarters ago to 7% last quarter and now 10%. So, clearly, encouraging trends. Brian, you just talked about it, can you see that improving further given some of your key partners like YouTube are seeing fairly notable improving trends? And on the emerging side, can we still expect to see some benefits from renewals with those partners later this year?
Robert Kinsel: That is the right approach and we've done that several times when I was on the auto side.
Robert Kinsel: So that's that is how I think about it.
Robert Kinsel: And you have to do it with multiple partners to automate so that's.
Robert Kinsel: That is the responsible way to approach it and I think the.
Robert Kinsel: When you think about the different markets.
Robert Kinsel: It is very obvious.
Robert Kinsel: Dual approach makes sense.
Robert Kinsel: Our discerning approach based on the properties of the market.
Robert Kinsel: Hum.
Cutgun Marat: I'm glad that.
Cutgun Marat: Thanks, Jekyll, for the question. On the renewals, we don't necessarily comment on our negotiations with partners, and it's a promising, growing platform with the emerging partners, and we'll continue to work with them collaboratively to grow the space. On the ad-supported, again, they're, you know, YouTube, Spotify, continuing to see favorable trends there in core ad-supported, and we would expect that to flow through over time. It does take time, and I think we're all seeing a stabilization there, although choppy in places across the ad marketplace, but that stabilization we continue to see, and based on their results, we would look to see that coming in future quarters as well.
Robert Kinsel: Some of our partners already seeing it that way as well because it is in our mutual interest.
Robert Kinsel: So it just we just got to do it right and we've got to do it together and be very methodical.
Cutgun Marat: Analytical about it together.
Cutgun Marat: Thank you.
Cutgun Marat: Thank you.
Cutgun Marat: One moment for questions.
Cutgun Marat: Our next question goes from cut gun Mara with Evercore ISI you May proceed.
Cutgun Marat: Great. Good morning, and thanks for taking the question I just wanted to follow up on the <unk>.
Cutgun Marat: Outlook for recorded music AD supported trends I think growth accelerated from low single digits, two quarters ago to 7% last quarter to now 10%. So clearly encouraging trends Brian you just talked about some continued stabilization in your answer to <unk> question regarding core AD trends can we.
Brian: Thanks for the question. Thank you. I would now like to turn the call back over to Robert Kinsel for any closing remarks. All right, thank you. Well, what I'd like to say is that, you know, being here on the job. Um, I feel it. We're in a very strong position, and it's incredible to see the amount of work that we've done preparing ourselves for it. We have a refreshed team. We know what we need to do, or have them put it out there publicly, and we're going after it, and all of this is truly underpinned by having the right leadership team that gels together really well and amazing teams that we've been investing in all around, for the results of seeing us have success on the charts with great talent that we sign.
Cutgun Marat: See that improving further given some of your key partners like Youtube are seeing fairly notable improving trends and on the emerging side can we still expect to see some benefits from renewals with those partners. Later this year. Thank you.
Brian: Thanks, Scott for the question.
Brian: On the renewals, we don't necessarily comment on our negotiations with partners.
Operator: It's a promising growing platform with the emerging.
Operator: Partners and we will continue to work with them collaboratively to grow the space.
Operator: On the AD supported again there.
Cutgun Marat: Youtube Spotify continuing to see favorable.
Robert Kinsel: Thank you very much, and we'll talk to you in a quarter. Thank you. Thank you for your participation.
Cutgun Marat: Trends there in core AD supported and we would expect that to flow through over time. It does take time and I think we're all seeing a stabilization there although choppy in places across the AD marketplace, but that stabilization, we've continued to see and based on their results.
Operator: You may now disconnect. La la la la la la la la la la la la la la la la la la la la la la la la la A hopeless romance that's gone my life Surrounded by couples all the time I guess I'll keep hanging at the sign How do you love me? Oh, I wish I'd find a lover that you'd want me But I'm crying in my room, so can't say goodnight But still I want you more, more, more I give a freak and tell me you're fine But no one lets you through the doorframe Oh, the way you make me feel, the love that you bring You make me feel so I look for his head around every day I guess we got lost or two, boy Maybe I'm running too late Ain't coming back, this is my bad word Love ain't as good as it sounds How do you love me?
Cutgun Marat: We would look to see that coming in future quarters as well.
Speaker Change: Thanks for the question.
Speaker Change: Thank you.
Cutgun Marat: Thank you I would now like to turn the call back over to Robert Kintzel for any closing remarks.
Speaker Change: Alright, thank you.
Cutgun Marat: Well.
Speaker Change: So I'd like to say is that.
Cutgun Marat: Being a year on the job.
Speaker Change: I feel.
Cutgun Marat: We're in a very strong position and so.
Robert Kinsel: It's incredible to see the amount of work that we've done preparing ourselves for it.
Robert Kinsel: We have a refresh team.
Robert Kinsel: We know what we need to do.
Brian: We are confident to put it out there publicly and.
Robert Kinsel: And we're going after it.
Robert Kinsel: And all of this is truly underpinned by having the right leadership team that gels together really well.
Robert Kinsel: Amazing teams that we've been investing into.
Operator: Oh, I wish I'd find a lover that you'd want me But I'm crying in my room, so can't say goodnight But still I want you more, more, more I give a freak and tell me you're fine But no one lets you through the doorframe Oh, the way you make me feel, the love that you bring You make me feel so Oh, I wish I'd find a lover that you'd want me But I'm crying in my room, so can't say goodnight But still I want you more, more, more Oh, I wish I'd find a lover that you'd want me But I'm crying in my room, so can't say goodnight But still I want you more, more, more I give a freak and tell me you're fine I give a freak and tell me you're fine But no one lets you through the doorframe Oh, the way you make me feel, the love that you bring You make me feel so I give a freak and tell me you're fine
Robert Kinsel: All around.
Brian: We are delivering the results, saying you know what I'm, saying else having success on the chart.
Brian: With great talent.
Robert Kinsel: We signed just a few years ago, it's incredible so I'm very confident about our continued performance.
Brian: Have a great belief in lithium.
Speaker Change: Here with me so thank you very much.
Robert Kinsel: We'll talk to you in the quarter.
Speaker Change: Thank you. Thank you for your participation you may now disconnect.
Operator: Yeah.
Operator: Yes.
Operator: [music] DRAM.
Speaker Change: Thank you.
Operator: Okay.
Speaker Change: Thank you.
Operator: [music] outlining.
Speaker Change: Thank you.
Operator: [music] Mr Heath.
Operator: Yes.
Operator: Yes.
Speaker Change: Thank you.
Speaker Change: Thanks Omar.
Operator: Right.
Operator: The calendar.
Operator: Thanks.
Operator: [music] earnings.
Speaker Change: All right.
Speaker Change: Thank you.
Operator: Yes.
Operator: [music].
Operator: Okay.
Operator: [music].